- •Government shutdown halts SEC operations, stalling crypto policy progress nationwide.
- •Crypto regulations freeze as key federal agencies suspend essential activities.
- •TD Cowen warns prolonged shutdown delays SEC’s crypto relief efforts.
The ongoing government shutdown in the United States has thrown a wrench into the crypto industry’s momentum. According to investment bank TD Cowen, federal agencies like the Securities and Exchange Commission (SEC) have been forced to pause most of their operations, leaving crucial policy developments in limbo.
Congress’s failure to agree on a funding deal triggered the shutdown, leading to furloughs across multiple agencies and halting non-essential activities. Consequently, progress on regulatory initiatives such as exemptive relief for tokenized assets and other crypto products has been halted, said TD Cowen’s Washington Research Group, led by Jaret Seiberg.
Seiberg emphasized that the SEC will not be able to resume any crypto‑related policy work until a funding deal is reached. This pause extends beyond the shutdown period, as staff will face backlogs and competing priorities upon their return. The extended delay could slow down the regulatory clarity that the digital asset sector has been anticipating.
Crypto Policy Direction Shifts Amid SEC Standstill
Under its current operations plan, the SEC is functioning with only a minimal number of staff to handle emergency situations. Many pending matters, including the long‑awaited approval of crypto exchange‑traded funds, remain frozen. Those applications were reportedly nearing the finish line before the shutdown took effect.
According to TD Cowen, the SEC’s paralysis leaves the responsibility for crypto oversight temporarily leaning toward other financial regulators. Agencies such as the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation continue to operate during the shutdown. These institutions may now influence the direction of crypto‑related policies, particularly those tied to stablecoin issuance and tokenization in payment systems.
Seiberg noted that the focus will likely shift toward how banks navigate their ability to issue stablecoins, hold digital assets, and develop tokenized payment frameworks. This shift could mark a temporary change in the balance of regulatory power while the SEC remains constrained.
The extended government shutdown underscores how dependent the crypto sector has become on regulatory clarity. With the SEC at a standstill, the industry faces uncertainty in areas ranging from tokenized equities to exchange‑traded funds. As agencies wait for Congress to reach a funding deal, the delay threatens to stall innovation and investment across the digital asset market.