The year 2023 is not going well with the US government with back-to-back legal batting, and now the potential threat of a US govt shutdown is looming in Washington; good or bad news for crypto? If U.S. politicians disagree on government spending by September 30th, all essential laws related to the crypto bill, market creation, and stablecoin management will suffer.
In July, the House Financial Services Committee approved vital crypto-related bills, a significant step for crypto regulation. However, the looming government shutdown may disrupt legislative progress. Despite regulatory clarity, Bitcoin’s fate hangs in the balance; it hinges on Spot Bitcoin ETF approvals. Bitcoin faces a decline below the $26,800 level, trading under $26,500 and breaching key support levels at $26,200. This influences the downside potential.
US Govt Shutdown Has Lot in Stake?
Should a shutdown occur? it would frantically halt all legislative progress until a funding resolution is reached. While government shutdowns are not unprecedented in U.S. history, their underlying causes have evolved, shifting from concerns over public funding to more politically motivated activities.
According to Ron Hammond, the Blockchain Association’s director of government relations, the fractured state of the House, with Republicans divided and the Senate forging its path, makes a shutdown increasingly likely. This is a sheer disappointment for companies like Ripple, who are hailing for Crypto bills, as it may further delay the bill.
But not for all; some of these bills enjoy bipartisan support, which means they can pass in floor votes, but they are not without political minefields. One such challenge lies in the differing approaches of the two major parties towards stablecoin legislation.
The Deadline is Approaching. Is the US Government Reacting?
The clock is ticking, with lawmakers having until September 30 to agree on spending bills before the start of the new fiscal year. All the Federal agencies, including digital asset regulators like the SEC and CFTC, would stop non-essential activity if the government shuts down non-payment. This financial trouble may allow the SEC to settle many crypto cases.
Impact on Spot ETF’s and Legal Cases
During a potential government shutdown, crypto firms find a silver lining. Most of the SEC’s enforcement activities will pause with immediate effects that may temporarily relieve many crypto litigations filed by the SEC.
Federal court cases will proceed as usual for a few weeks until court fee funds are depleted. While this impacts companies awaiting SEC decisions on bitcoin spot ETFs and those in disputes with regulators, experienced observers suggest the process won’t grind to a complete halt. Since they are not part of the regulations, there will be no impact on FTX, Voyager, or Celsius cases. They will proceed as usual.