The Potential Threat of a US Government Shutdown and Its Impact on Crypto
The year 2023 has been challenging for the US government, with ongoing legal battles and now the looming threat of a potential shutdown. But what does this mean for the crypto industry? If politicians fail to agree on government spending by September 30th, it will have significant implications for crypto-related bills, market creation, and stablecoin management.
In July, the House Financial Services Committee made progress by approving important crypto-related bills, signaling a step forward in regulation. However, the possibility of a government shutdown could disrupt this legislative momentum. The fate of Bitcoin is also uncertain as it depends on the approval of Spot Bitcoin ETFs. Currently trading below $26,500 and breaching key support levels at $26,200, Bitcoin’s downside potential is influenced by these factors.
What’s at Stake with a US Govt Shutdown?
If a shutdown occurs, it would halt all legislative progress until a funding resolution is reached. While government shutdowns are not uncommon in US history, their causes have shifted from concerns over public funding to more politically motivated activities.
Ron Hammond, the Blockchain Association’s director of government relations, believes that the fractured state of the House and Senate divisions make a shutdown increasingly likely. This is disappointing news for companies like Ripple who are advocating for crypto bills as further delays may occur.
13) I would like to stress these are just rumors and all the bills mentioned still need to go to a vote in their respective chambers. Upside, both sets of bills are bipartisan and needed. Downside, there is a lot of landmines politically that can tank either bill/any deal.
However, some of these bills do enjoy bipartisan support, which increases their chances of passing in floor votes. But they still face political challenges, particularly regarding the differing approaches of the major parties towards stablecoin legislation.
The Deadline Approaches: Is the US Government Reacting?
The clock is ticking, and lawmakers have until September 30th to agree on spending bills before the start of the new fiscal year. If a shutdown occurs, all federal agencies, including digital asset regulators like the SEC and CFTC, would halt non-essential activities due to non-payment. This financial trouble may provide an opportunity for the SEC to settle many ongoing crypto cases.
Impact on Spot ETFs and Legal Cases
A government shutdown could provide a silver lining for crypto firms. Most of the SEC’s enforcement activities would pause immediately, temporarily relieving many crypto litigations filed by the SEC.
While federal court cases would continue for a few weeks until court fee funds are depleted, experienced observers suggest that the process won’t come to a complete halt. Companies awaiting SEC decisions on bitcoin spot ETFs and those involved in disputes with regulators may be affected, but this won’t impact cases involving FTX, Voyager, or Celsius as they are not part of the regulations.
Hot Take: The Uncertain Future of Crypto Amidst a Potential US Govt Shutdown
The looming threat of a US government shutdown poses significant challenges for the crypto industry. With the fate of vital crypto bills, market creation, and stablecoin management hanging in the balance, the industry’s regulatory progress could be disrupted. Additionally, Bitcoin’s performance is influenced by the approval of Spot Bitcoin ETFs, which may face delays due to a shutdown.
While some bills enjoy bipartisan support, political minefields remain. The differing approaches of the major parties towards stablecoin legislation further complicate matters. If a shutdown occurs, it would halt legislative progress and impact federal agencies like the SEC and CFTC. However, it may provide temporary relief for ongoing crypto litigations filed by the SEC.
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