• 16 Crypto ETFs remain on hold as the U.S. government shutdown enters its third week.
• Political deadlock in Washington delays ETF approvals, freezing new crypto investment inflows.
• Analysts expect mass Crypto ETF approvals once the U.S. government reopens operations.

The federal government of America is in its third week of shutdown, which suspended its main financial activities and leave 16 Crypto ETF awaiting approval. The prolonged political stalemate will pose a risk of holding up new investment products in case the shutdown drags on until November. There is a keen watch on the situation by market participants, as ETF approvals would have major impacts on digital asset markets.

The standstill in the U.S. government reached October 1 when the lawmakers could not agree on funding. The Republican versus democratic issues have made organizations such as the U.S. Securities and Exchange commission (SEC) to run minimal staff. The SEC, which is in charge of approving the Crypto ETFs, has shunned the majority of non essential actions.

Crypto ETF Approvals Stall Amid Political Stalemate

Cryptocurrency investors had foreseen a wave of ETFs in October. The SEC would be able to rule on at least 16 pending applications of Crypto ETFs and another 21 applications were submitted within the first eight days of the month. But as the shutdown continues, time has run out without a single official move and this leaves the applicants in limbo.

Also Read: Bitcoin Rebounds Above $118K as ETFs and Long-Term Holders Ease Selling Pressure

The timeline of ending the impasse has no deadline. They are both at loggerheads on different fiscal priorities. Another issue that has surfaced due to the standoff pertains to governance and stability of the U.S. regulatory operations.

Republicans have insisted on massive spending reductions as a way of reining in the increasing national debt, which has now reached more than 37.8 trillion or approximately 111,000 per American citizen. They plan to allocate more funds to enhance the primary enforcing of borders and cutting on other segments. Democrats are in opposition to such spending cuts and are lobbying to increase the tax credits that improve the cost of healthcare among other things.

Congress Deadlock Extends U.S. Shutdown and ETF Delays

The Senate has not submitted votes yet, and the House of Representatives is not in session. There is no direct avenue to eliminate the shutdown since such progress has not happened in any form of legislation.

In order to reestablish the governmental functions, the Congress has to approve funding bills, in other words, new appropriations bills or a continuing resolution. A continuing resolution would enable the government to be temporarily financed at existing levels so that the negotiations could proceed. After the bills are passed by the Congress, President Donald Trump can sign bills, marking the official end of the shutdown.

The Republicans are the current holders of both houses of congress but do not command enough votes in the Senate to pass the funding bills without the Democrats. The stalemate is the 11th government shutdown in the history of the U.S. and the first since the last one in 20182019 which lasted 35 days, the longest in history.

Source: Congressional Research Service 

ETF analysts project an outburst of Crypto ETF trade once the government is opened. Nate Geraci, the president of NovaDius Wealth Management, told an X post that the government shutdown would finish, and the floodgates would open to begin approving of spot crypto ETFs in large numbers. 

He observed that irony rather than stability is the political gridlock and the increasing fiscal debt posing a setback to a sector which is intended to render financial independence without government influence.

In August, Bitfinex analysts recommended that another altcoin run may come after ETF approvals, since these funds enable safer exposure to digital assets. Investors are currently waiting on Washington’s next step, and the Crypto ETF market is frozen in the political stalemate.

Also Read: Thailand Makes Bold Move to Expand Crypto ETFs Beyond Bitcoin