- Without a deal by midnight Oct 1, many federal operations within the U.S. Government will come to a halt, furloughing up to 750,000 workers.
- The Senate’s consideration of a digital-asset market structure bill will likely be delayed further if no agreement is reached.
- SEC and CFTC actions, including approval for crypto ETFs, may get stalled, fueling short-term uncertainty.
For the past several days, media reports have been abuzz about an imminent U.S. Government shutdown. But what does this mean? And can a Government just stop functioning?
In the United States, a government shutdown happens when Congress fails to pass appropriations bills or a continuing resolution (CR) to fund government agencies before existing funding expires. When that lapse occurs, typically at midnight on October 1 this year, all non-essential federal services will be halted. This means a large portion of the workforce gets furloughed. However, essential operations like defense, health services, etc., continue but in a limited capacity.
Standoff over health, funding & priorities
Currently, Republicans are pushing a ‘clean’ funding extension through November 21, keeping current spending levels flat. Democrats, however, are demanding that the resolution include reversals of recent Medicaid cuts and extensions for Affordable Care Act premium tax credits.
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A White House meeting on September 30 reportedly ended with no clear agreement, and Senate leaders are planning to revive a House-passed CR for a vote. A BBC report showed President Trump warning Democrats that a shutdown could allow his administration to take ‘irreversible’ steps. He even threatened that there could be possible layoffs rather than mere furloughs.
For President Trump, the threat of a shutdown is not all too new. During his leadership in 2018, Trump faced a 35-day shutdown when Democrats resisted his demand for $5.7 billion in funding for his Mexico border wall.
A shutdown could disrupt the crypto market structure legislation
Much of the crypto world is on edge as a shutdown would further delay the Senate’s pending digital asset market structure bill, or what is coming to be known as the CLARITY Act. Already, a markup hearing was pushed from September 30 to late October, any shutdown will likely delay it further.
Furthermore, regulatory bodies like SEC and CFTC may scale back operations. Pending crypto ETF reviews, rulemakings, and enforcement actions could be stalled until funding resumes. These bottlenecks could spook markets and investor sentiment. For example, a delay in passing the CLARITY Act could shake investor confidence, leading to a rise in volatility and slowing capital flows towards the crypto market.
Many view this Government shutdown as a temporary drag, and not a permanent derailment. However, if the sessions get stalled now, momentum is likely to return only in 2026, when Congress gets back to business, and not anytime soon.
