Government Shutdown Slows Progress on Clarity Act and Other Crypto Issues

The government shutdown could reportedly threaten some long-term goals of the crypto industry.

With only the essential employees of federal agencies allowed to work during the shutdown that has so far lasted 22 days, some everyday tasks are getting done, but potential policy changes are being delayed, CoinDesk reported Wednesday (Oct. 22).

Because the Senate is largely focused on issues around the shutdown, it is running out of time to consider bills having to do with the regulation of crypto markets, according to the report.

For example, a top goal of the crypto industry has been the passage of a Senate bill to match the House of Representatives’ Digital Asset Market Clarity Act, the report said.

The shutdown has also halted some of the work of regulators, such as the Securities and Exchange Commission’s consideration of exchange-traded products and initial public offerings, per the report.

It was reported on Oct. 16 that the SEC indicated uncertainty about whether it would approve a surge of new filings for exchange-traded funds seeking to offer extreme leverage.

The regulator said that since the onset of the government shutdown, dozens of asset managers had submitted registration statements for ETFs proposing leverage levels as high as five times the daily returns of underlying equities. It added that it was unclear if these ETFs would comply with the Derivatives Rule.

On Oct. 10, it was reported that to make it easier for companies to go public during the shutdown, the SEC said it would not look to penalize companies that left out pricing information from initial public offering prospectuses filed during the shutdown and then list either during or after the shutdown.

The SEC said in an announcement posted on Oct. 9 that it made this change because officials were not able to go over registration statements during the shutdown.

In July, the House passed the CLARITY Act, which would establish a broad regulatory structure for digital assets. However, the fate of the Clarity Act in the Senate remained uncertain because Democrats who had supported the bill in committee in the House had begun to back away under pressure from liberal members and party activists.