US Government Shutdown Could Negatively Affect the Crypto Market

In recent times, the increasing interest in the cryptocurrency market has caused investors to turn their attention to this area. However, the potential government shutdown in the U.S. could have negative effects on the crypto sector. U.S.-based investment bank TD Cowen noted that the government shutdown has significantly halted the work of the Securities and Exchange Commission (SEC), leading to serious delays in the cryptocurrency industry.

Due to Congress's failure to reach a budget agreement, many federal employees went on unpaid leave as of last week. Analysts at TD Cowen emphasized that this situation could last for at least several weeks, stating that the SEC will not be able to make progress on new regulations and crypto-focused "exemption" initiatives.

Jaret Seiberg, head of TD Cowen's Washington Research Group, believes that the SEC will not be able to take any steps regarding crypto policies due to the lack of government funding. He also indicated that the shutdown does not merely mean a delay of a few weeks, as recovery will take time even after staff return. It has been reported that the SEC is currently operating with a "limited number of personnel who can respond to emergencies only." This situation has led to the indefinite suspension of crypto products, such as the Bitcoin Exchange Traded Fund (ETF), that are awaiting approval.

TD Cowen also noted that, due to the SEC being effectively closed, the regulatory agenda concerning crypto will now shift to other institutions such as the Federal Reserve (Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC). It was stated that the decisions made by these institutions regarding banks' authority to issue stablecoins and custody crypto assets should be closely monitored. For investors, these developments indicate that a period filled with uncertainties regarding the regulation of crypto assets is ahead.