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Impact of the US Government Shutdown on Federal Agencies
The ongoing US government shutdown has caused significant operational slowdowns across numerous federal agencies, including the pivotal Securities and Exchange Commission (SEC). This slowdown has notably affected the anticipated approval process for the much-awaited spot cryptocurrency exchange-traded funds (ETFs).
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For the fourth consecutive attempt, legislators from both political parties have failed to pass spending proposals aimed at reopening the government, which continues to prolong the shutdown into the coming week.
Spot Cryptocurrency ETFs in Limbo
According to reports from Crypto In America, the government shutdown has left the SEC with limited capacity to address only critical issues such as fraud and market emergencies. Consequently, the agency’s usual operations, including the processing of initial public offerings (IPOs), ETFs, and other filings, have come to a halt. Rulemaking activities have also been paused during this period.
The formal approval required from the SEC’s Division of Corporation Finance is essential for spot crypto ETFs to begin trading. This means that the launch of products involving cryptocurrencies like Litecoin (LTC), Solana (SOL), and XRP is likely on hold until government funding is restored. Despite these delays, the market saw a notable uptick last Friday, with LTC, SOL, and XRP experiencing a surge of 17%, 16%, and 9%, respectively, over the past week. This rise is part of a broader recovery in the cryptocurrency market, spearheaded by Bitcoin (BTC) nearing its record highs.
Introduction of New Generic Listing Standards
“It’s akin to a rain delay,” remarked Bloomberg’s ETF analyst Eric Balchunas to Crypto In America, underscoring the industry’s growing impatience as they await clarity on the SEC’s operational status. An SEC spokesperson confirmed that the shutdown is impeding their capacity to respond to media inquiries.
The current situation follows the SEC’s recent directive for crypto ETF issuers to retract their 19b-4 filings. This comes on the heels of approved generic listing standards, which eliminate the need for individual filings. Consequently, crypto ETFs might become effective on a rolling basis once the shutdown ends.
Industry analysts point to the daily chart showing the total cryptocurrency market capitalization near historic peaks, reflecting the resilience and potential growth of the digital asset sector.
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