Although the U.S. government resumed office after over a month-long shutdown, the chances of institutional crypto products arriving sooner look to be very slim. During the longest shutdown period between Dec. 22, 2018 and Jan. 25, 2019, federal agencies like the CFTC and the SEC had to close down its business.
On January 26, SEC Chairman Jay Clayton announced that his 4500 employees would resume office amidst the end of the shutdown. During the shutdown, the regulator monitored the markets. However, it took actions only “to prevent imminent threats to property”.
However, the agencies have five weeks to work to catch up behind them. Crypto industry advocates close to the federal agencies say that one should not be under the illusion that digital currency products will get any preferential treatment.
Kristin Smith of the Blockchain Association also said that the regulatory agencies will take some time to begin operations in full swing. Smith said:
“Everything still works but you need to give it time to warm up. It’s been frustrating, but I think at worst you’ve seen companies delay rather than cancel plans and now folks are eager to pick up where they left off.”
Longest Shutdown in the U.S. History
The five weeks of the shutdown was supposedly the longest in the U.S. history. Although offices have resumed for now, the Congress and the U.S. President Donald Trump have yet to arrive at a common consensus in deciding the permanent budget for the border wall with Mexico. If the two sides still don’t agree by February 15, the government will shut down again.
Steve Ehrlich, chief operating officer of the Wall Street Blockchain Alliance, believes that the U.S. Government Shutdown will probably have “some repercussions for the space”. In an email to CoinDesk, Ehrlich wrote:
“I can’t imagine any company trusting that the government will not be shut down again following the 21-day reprieve. Until there is more certainty that the government will not get shut down again in 21 days, federal regulators will focus their activities on serving the broadest segment of the population and addressing their highest priorities, which may not include crypto.”
Crypto Companies Could Consider Moving Out of the U.S.
However, the State and House committees are discussing the possible measures for the aversion of the future shutdown. Ehrlich says that such an uncertain atmosphere will lead crypto companies to think twice in establishing their base in the U.S. He added:
“Without the comfort of knowing that the political climate will be calmer for the indefinite future, there will be companies that seek to avoid domiciling themselves in the U.S. or will de-risk themselves by avoiding serving U.S. customers … Those companies that are committed to the U.S. will also face challenges.”
Templum Markets CEO Vince Molinari also shares similar views saying “It would be impossible for any agency to catch up immediately after so many weeks sidelined, despite their best efforts”.
Ehrlich also stated that communication between new crypto startups and SEC’s FinHub division have turned cold. Soon as the government called-off the shutdown, VanEck and NYSE Arca re-applied for their Bitcoin ETF products. Note both the applications are still pending registration in the Federal Register. Only after the registration, the SEC will consider them for review.