US Government Shutdown Enters Third Week and Stalls Crypto ETF Approvals

The US government shutdown has entered its third week, while many critical regulatory operations are stuck in limbo. Among the critical regulatory operations stuck are the 16 cryptocurrency exchange-traded fund (ETF) applications. The Republicans and Democrats' deadlock has left the country crippled since October 1. The deadlock resulted in halting the progress on financial markets regulations and delaying the long-awaited ETF approval that had the potential to reshape the country's crypto industry.

The U.S. Securities and Exchange Commission (SEC), the agency responsible for approving ETF applications, is operating with only essential staff. This has caused a complete standstill in processing the wave of ETF filings that flooded in at the start of October.

According to filings, the SEC was expected to make final decisions on at least 16 crypto ETFs this month, with another 21 new applications submitted in the first eight days of October alone. Analysts say the delays have created significant uncertainty for the digital asset sector, as these ETFs are seen as a gateway for broader institutional investment.

ETF analyst Nate Geraci, president of NovaDius Wealth Management, wrote on X that “Once the government shutdown ends, spot crypto ETF floodgates open,” predicting mass approvals could follow soon after. He noted the irony that “growing fiscal debt and political theater” were delaying crypto innovation, precisely the issues blockchain was meant to address.

Political Tension Deepens

The shutdown stems from a bitter partisan standoff over federal spending priorities. Republicans are demanding major spending rollbacks to curb the ballooning $37.8 trillion national debt, roughly $111,000 per U.S. citizen, while boosting allocations for border security. Democrats, in contrast, oppose cuts to healthcare and are pushing to extend tax credits that lower health insurance costs.

Important Reads: SEC Approves First U.S. Multi-Asset Crypto ETP from Grayscale

The Senate is not set to hold any votes until Tuesday, while the House of Representatives remains out of session. With no immediate legislative path forward, analysts warn the shutdown could persist into November.

To end it, Congress must either pass all 12 appropriation bills funding government agencies or a short-term continuing resolution to keep operations running. Once both chambers approve, President Donald Trump can sign the measures into law.

Market observers say the prolonged shutdown could delay what many expect to be a transformative moment for crypto markets. Bitfinex analysts previously suggested that approval of the pending ETFs could trigger a new “altcoin season,” as diversified exposure to crypto assets through regulated ETFs would attract mainstream investors.

Until Congress acts, however, both Wall Street and the crypto community remain in suspense, waiting for Washington’s gridlock to break and the long-promised ETF floodgates to finally open.