Prolonged U.S. Government Shutdown Will Ultimately Delay New Crypto Spot ETFs Approval

The ongoing impasse between the two major political parties in the United States, which resulted in the government’s shutdown, is likely to continue. On Wednesday, Democratic Senators failed to back a vote to end the U.S. government shutdown.

As such, crucial services in the United States government will continue to be affected. Moreover, the executive has warned that more people will be laid off, if the deadlock is not solved soon enough.

“Let’s be honest, if this thing drags on for another few days or, God forbid, another few weeks, we are going to have to lay people off,” Vice President JD Vance said on Wednesday.

How Will the Crypto Market Be Impacted by the U.S. Government Shutdown?

Regulatory and Oversight Disruptions

If the U.S. government shutdown continues for a prolonged period, major regulatory agencies led by the SEC and CFTC will be crippled. Already, the U.S. SEC has warned that it may not be in a position to review spot ETF applications if the government shutdown continues.

Policy and Legislative Delays

The crypto market has been anticipating the Clarity Act to pass the Senate in the near term. However, a prolonged U.S. government shutdown will likely delay crypto policies in the pipeline.

Key Economic Data Blackout

A potential prolonged U.S. government shutdown will also impact agencies mandated with providing key economic data including jobs, inflation, and GDP. With the crypto volatility heavily influenced by inflation data, including the FOMC report, a prolonged shutdown will impact the midterm market outlook.

Safe Haven and Risk Sentiment Shift

In the long term, a prolonged U.S. shutdown will portray the crypto market in a positive light. Already, the crypto market cap has gained 4% during the last 24 hours to hover above $4.11 trillion at press time.