There is a growing scare of a potential US Government shutdown.
This shutdown, if ushered in might impact the activities of the US SEC and as such, delay Bitcoin ETF applications.

There are a growing number of reports suggesting that the United States government could shut down on October 1 if a temporary funding bill is not passed before the start of the next fiscal year. 

From the US macroeconomics point of view, this will not be the first time such an incident will be playing out. Between late 2018 and early 2019, the U.S government went under for 35 days and during this time many agencies including the U.S. Securities and Exchange Commission (SEC) was impacted and left with a lot of financial and operational backlog.

The operations of the U.S SEC are likely to be hampered by the U.S. government’s decision if a shutdown becomes the only possible option at this time. 

Speaking to Bloomberg on Wednesday, SEC Chair Gary Gensler noted that should the shutdown happen, his agency will be reduced to a “skeletal” staff, hence the SEC may not have the appropriate oversight on the market as it used to. A potential shutdown would make the SEC unable to process the filings of companies that intend to go public as well as other statutory market applications.

Despite the likelihood of a temporarily decapitated SEC, it is worth noting that the market may likely continue to operate normally as its inherent operations are not primarily dependent on the government. 

SEC Shutdown and Impact on Spot Bitcoin ETF

In the event of a shutdown, the SEC would stop processing applications including the seven filings for a spot Bitcoin (BTC) Exchange Traded Fund (ETF) product, leading to a further delay in the approval of the applications. 

At the beginning of September, SEC moved the deadlines for approving or denying Bitcoin ETF applications from major investment firms to mid-October 2023. The decision was made as the SEC’s 45-day clock set which was scheduled to run out on September 4, 2023, started getting close.

With this revised timeline, top investment asset management firms like BlackRock, Fidelity, WisdomTree, Invesco, Valkyrie, and Bitwise were kept in further suspense. Such delays are not uncommon with the regulator as it usually takes up its 240 days stipulated by law for the ETF review process. 

In the case of the spot BTC ETF, a decision was expected no later than mid-October but with the potential shutdown of the government, getting a decision from the SEC may take a longer time.

Outside of the government shutdown, the SEC could also postpone its decision after the agreed date. Other crypto-related applications are likely to be impacted by the October 1 likely shutdown. 

Bitcoin Price Impact

The SEC’s move to postpone a decision on the spot BTC ETF applications triggered a 5% price dip for Bitcoin when it was announced. With the latest development, the price of Bitcoin may decline further. In the meantime, the coin is trading at $26,992.06, already down by 0.43% in the past 24 hours. At this time, investors are keeping their fingers crossed about the future of the leading crypto asset.

Meanwhile, BTC is in high demand amongst institutional investors and this has contributed to a surge in its mining difficulty from about 1.1E/s in 2026 to over 400 E/s in 2023. This demand can help sustain the price of the coin in the advent of a potential mishap.

---

Filed under: Bitcoin - @ September 22, 2023 10:25 am