TLDR
- The SEC’s crypto policy progress is paused as the US government shuts down.
- Crypto ETFs and tokenized equities face approval delays amid the shutdown.
- Agencies like the Federal Reserve now lead crypto regulation during the shutdown.
- SEC crypto relief for tokenized assets and new products is delayed indefinitely.
The US government shutdown has halted critical cryptocurrency-related policy efforts, leaving key decisions in limbo. As Congress failed to agree on funding, agencies like the Securities and Exchange Commission (SEC) have suspended ongoing work, including the approval of new crypto products and exchange-traded funds (ETFs). Investment bank TD Cowen highlighted that these delays could last well beyond the shutdown, affecting the future of crypto regulations.
SEC Halts Crypto Policy Efforts Amid Shutdown
The shutdown has led to the SEC effectively going dark, with many of its staff furloughed. According to Jaret Seiberg, head of TD Cowen’s Washington Research Group, the agency will not resume work on crucial crypto-related policy changes until the government is funded. This includes the SEC’s efforts to explore exemptive relief for new cryptocurrency products and tokenized equities.
Seiberg further noted that the shutdown’s impact would be more than just a delay for the duration of the closure. Once the SEC’s staff returns, they will need to address pressing issues that piled up during the shutdown. The agency’s focus will shift to emergency situations, leaving no room for significant progress on the crypto front.
No Movement on Crypto ETFs and Tokenized Assets
Progress on crypto exchange-traded funds (ETFs) has also come to a halt. Several crypto ETFs were close to receiving approval before the shutdown, but now they are stuck in limbo. These ETFs had been seen as a significant step toward integrating digital assets into traditional financial markets.
In addition, efforts regarding tokenized equities have been suspended. Digital asset companies seeking relief for tokenizing equities will have to wait until the SEC can resume its work. This delay leaves businesses and investors in a holding pattern, uncertain of when they will get clarity on the future of tokenization in financial markets.
Other Agencies Remain Operational
While the SEC is paused, other federal agencies remain operational, such as the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. These agencies continue to oversee areas like stablecoins and tokenized payment systems. TD Cowen is closely monitoring these entities for any developments or actions related to cryptocurrency regulations.
Despite the SEC’s shutdown, these agencies could play a pivotal role in shaping crypto policy in the interim. The Federal Reserve and other operational agencies might take on a more prominent role as the government works toward a resolution.
Outlook for Crypto Regulation Amid Shutdown
As the shutdown persists, uncertainty remains about the timeline for crypto policy advancements. While the SEC is focused on other priorities post-shutdown, agencies like the Federal Reserve will likely take the lead in crypto-related decisions. This shift in focus means that the crypto industry may see changes in how banks handle stablecoins or manage tokenized payment systems.
The crypto sector, still awaiting regulatory clarity, will have to navigate these challenges until the SEC can resume its work. As TD Cowen suggests, the current situation leaves crypto companies and investors in a state of uncertainty, waiting for government action on policy changes.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
