The US government shutdown is now a reality, forcing the Securities and Exchange Commission (SEC) to drastically reduce its operations as of this Wednesday. The agency has activated a contingency plan due to the lack of funding. Therefore, most of its staff has begun securing their work in preparation for a multi-day pause.
Following an official notice, the SEC is now functioning with a skeleton crew. This team is responsible solely for emergency functions. On the first day of the shutdown, “non-excepted” personnel were dedicated to securing their workstations and preparing to restart operations once funding is restored. This paralysis halts nearly all of the body’s regulatory activity.
Minimal Operations and Reviews on Pause
The SEC’s ability to oversee the market is severely compromised. The agency has communicated that it will not participate in ongoing litigation, unless it is an emergency that directly threatens investor property. This could mean the temporary suspension of enforcement actions against crypto sector companies until the government resumes full operations.
Furthermore, and crucially for the industry, the SEC will not be able to review new registration applications. Although its electronic filing system continues to accept documents, there will be no staff to process them. This directly impacts non-urgent rulemaking and the supervision of other organizations, affecting the digital economy. Innovation and regulatory certainty are therefore left in a state of suspense.
What Does This Mean for Cryptocurrency ETFs?
The most immediate consequence for crypto investors is the halt of exchange-traded fund (ETF) applications. Highly anticipated products, such as the various Solana ETFs awaiting approval, will remain in indefinite limbo. The expectation of many analysts, which pointed to a possible approval in mid-October, now seems unattainable due to the agency’s inactivity.
Meanwhile, there is no clear end in sight for the US government shutdown. House Speaker Mike Johnson indicated that negotiations will not resume until next week. Disagreements between Republicans and Democrats over budgets, especially on healthcare cuts, maintain the stalemate. The SEC and its employees will only be able to return to work normally one day after Congress passes the new appropriations legislation.
