U.S. Government Shutdown Freezes SEC Crypto ETF Approvals
- The U.S. government shutdown has stalled SEC review of over 90 pending crypto ETF filings.
- ETF approvals expected in October for altcoins now face indefinite political delays.
- SEC’s limited staff can only handle emergencies, leaving ETF progress completely stalled.
The long-anticipated approval of U.S. crypto ETFs has hit another roadblock. This time, the reason is not market volatility but politics. The U.S. government shutdown has stalled the Securities and Exchange Commission’s review of more than 90 applications, leaving issuers and investors in limbo.
For weeks, analysts and fund managers had circled early October as the likely beginning of “crypto ETF season.” Solana, XRP, Cardano, and even Dogecoin-focused products were expected to lead the charge. But the SEC’s contingency plan during the shutdown has frozen all non-emergency activities, including ETF approvals.
Shutdown Forces SEC to Scale Back
The SEC confirmed that it would halt reviews of filings for new financial products. It also suspended approvals for exchange-traded funds, investment advisers, and broker-dealer registrations. Only essential staff remain on duty, and their focus is emergency litigation or matters involving threats to property.
Under the plan, the SEC’s EDGAR system remains functional, allowing companies to file required reports and updates. However, filings that require staff review, such as registration statements or offering qualifications, will not move forward. Issuers without automatic shelf registration statements could face significant delays.
The agency clarified that post-effective amendments to registration statements will still become effective after the designated statutory period. But without staff oversight, no requests for acceleration, exemptions, or interpretive guidance will be processed.
ETF analysts say the shutdown changes the timeline for crypto-related funds. Bloomberg’s Eric Balchunas noted earlier this week that “Crypto ETF approval season has officially arrived.” Now, those approvals appear unlikely until lawmakers resolve the budget impasse.
Political Standoff Clouds ETF Timeline
The U.S. government entered a partial shutdown after lawmakers failed to pass a funding bill. Senate Republicans and Democrats remain locked in a dispute over budget priorities, particularly on healthcare cuts and spending allocations.
The SEC joined other agencies in scaling back operations as the funding lapse took effect. A notice on Wednesday confirmed that most staff had been instructed to secure work and prepare for an eventual restart.
Industry voices have weighed in on the fallout. Robinhood CEO Vladimir Tenev told attendees at Token2049 in Singapore that while delays were likely, he remained optimistic. “I think that it’ll get sorted eventually,” he said, adding that the key question was how long the process would take.
Others were less upbeat. Nate Geraci, co-founder of the ETF Institute, posted that the shutdown would “definitely impact the launch of new spot crypto ETFs.” He warned that “ETF Cryptober might be on hold for a bit.”
Related: SEC Streamlines Process for Spot Crypto and Altcoin ETFs
Meanwhile, investors awaiting the SEC’s decisions now face uncertainty. The regulator had been reviewing dozens of applications covering altcoins, token baskets, and hybrid strategies. Approvals were expected to begin with Solana-focused funds.
The pause comes as demand for regulated crypto investment products continues to grow. Institutional and retail investors have been positioning for expanded market access through ETFs. The shutdown delays that momentum.
At present, there is no clear timeline for resolution. House Speaker Mike Johnson indicated that Republicans will not accept changes to their budget proposal. Democrats, however, have insisted on reversing cuts introduced in July. Without compromise, the SEC’s staff levels will remain limited.
Until then, ETF applicants must wait. The EDGAR system will continue accepting filings, but without staff review, progress is stalled. The SEC has said that employees will return to full duty on the first workday after appropriations are enacted.
