U.S. Government Shutdown Threatens Progress on Crypto Regulations
Summary:
The US House of Representatives has declined a Senate-led bill meant to finance the government, hinting at a possible partial government shutdown from October 1. If this occurs, it can halt all non-essential operations including regulatory actions on digital assets. Representative bills on cryptocurrency, like the FIT and the Blockchain Regulatory Certainty Act, may be sidetracked when regular activities resume. CEO of the Crypto Council for Innovation, Sheila Warren, has suggested that focus could shift from cryptocurrency due to a shutdown. Meanwhile, Bitcoin's value dropped below $27,000, but there’s no apparent link with the imminent governmental shutdown or congressional spending bills.
The legislative body of the United States, the House of Representatives has turned down a proposal led by Senate designed to finance the government. Proposals made by the prominent Speaker, Kevin McCarthy, have failed to win over the extreme right-wing members of the House, hinting at a forthcoming partial shutdown of the federal administration that would likely take place from the first day of October.
A situation where the U.S. government has to close is resultant of the Congress's failure to enact laws to secure financing for the upcoming fiscal year, an event which would render all federal agencies and departments inactive except for their essential duties. Regardless of the shortness of this potential shutdown – such as the instance in February 2018 which lasted less than 24 hours – legislative proceedings on cryptocurrency might be sidelined when normal operations resume.
Regulations, whether beneficial or detrimental to digital assets, would be interrupted during a government shutdown, reducing regulatory bodies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission to bare minimum operations. According to a 2019 report by Cointelegraph, such a shutdown severely limited the SEC's enforcement and oversight capacity.
Sheila Warren, the CEO of the Crypto Council for Innovation, noted that the issues that would gain Congress’s attention post-shutdown are uncertain. She added that other immediate actions required by the end of the year might shift the Congress's focus away from the funding of the government.
It should be recalled that several cryptocurrency-centered pieces of legislation, including the Financial Innovation and Technology for the 21st Century Act (FIT) and the Blockchain Regulatory Certainty Act, were passed by the lawmakers of the House Financial Services Committee in July. However, these bills could not be acted upon if the much-feared shutdown impedes legislative activities—leaving no room for amendments or voting.
Warren also mentioned that the political wave might divert from cryptocurrency to deal with other pressing matters that may arise during this period. These distractions are bound to multiply as the 2024 elections draw nearer. The Treasury Secretary, Janet Yellen, shared her disapproval of the inactive House Republicans in her speech on September 29. She warned that the shutdown, being unnecessary and risky, could potentially trigger economic difficulties.
President Joe Biden chimed in via his Twitter handle, pointing out the potential danger the shutdown could impose on critical research areas like cancer and food safety.
A rendezvous by the members of the House Financial Services Committee that was initially designated for the oversight of the SEC saw Virginia Representative Don Beyer, one of the few Democrats lobbying for a digital asset-related bill, expressing his worry over the financial status of the government
Increasingly, it looks more probable that a shutdown will occur, given the divided House Republicans and a seemingly independent Senate, says Ron Hammond, the Blockchain Association Director of Government Relations.
At the moment of this report, Bitcoin’s (BTC) value has dropped below the $27,000 bar, yet there seems to be no correlation with the congressional spending bills or accelerated action by the SEC about spot Bitcoin exchange-traded funds. Conversely, Ether (ETH) had risen beyond $1,600 in the last 72 hours after with companies declaring their intention to launch ETFs for Ether futures in October's first week.
Published At
9/29/2023 8:30:00 PM
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