TLDR
- The US government shutdown has exceeded 40 days, the longest in history.
- SEC crypto ETF approvals are stalled, affecting XRP and staked Ethereum.
- Schwab reports a 90% yearly rise in crypto portal traffic from investors.
- Analysts expect faster ETF approvals and higher altcoin trading post-shutdown.
The United States is nearing a historic 40-day government shutdown, halting many federal operations and delaying financial approvals. This extended closure is affecting the U.S. Securities and Exchange Commission (SEC), which oversees pending cryptocurrency exchange-traded funds (ETFs). Despite the slowdown, interest in digital assets continues to rise as investors anticipate a surge in ETF approvals once government offices resume normal operations.
Government Shutdown Extends, Affecting SEC Operations
The current U.S. government shutdown has become the longest in the country’s history, lasting more than 40 days. According to Kalshi data, there is a 53% chance that it could extend beyond 42 days. This period is nearly five times longer than typical federal closures, creating major delays across key financial and regulatory functions.
With limited staff and halted reviews, the SEC has paused several ongoing processes. These include applications for new cryptocurrency ETFs, such as XRP and staked Ethereum (stETH). The longer the shutdown continues, the longer these filings will remain pending, leaving asset managers and investors waiting for updates.
Investor Interest in Crypto ETFs Grows
Even as the SEC remains inactive, investor interest in cryptocurrency remains high. Between October 18 and 25, six XRP ETF proposals are awaiting review. VanEck has applied for a Lido-issued Ethereum ETF, while 21Shares filed for a 2x leveraged HYPE ETF. Several new altcoin-backed and leveraged ETF proposals also entered the pipeline last week.
Charles Schwab has reported a sharp rise in crypto engagement among its clients. According to CEO Rick Wurster, crypto continues to be one of the most discussed investment areas. Around 20% of Schwab clients now hold U.S.-listed crypto ETFs. Website traffic to its crypto portal increased by 90% in the past year, showing strong retail and institutional participation even during the regulatory pause.
ETF Approvals Expected to Resume After Shutdown
Analysts expect that once the government reopens, the SEC will move quickly to process the backlog of ETF filings. Many anticipate that approvals for crypto ETFs could accelerate to make up for lost time. This could create renewed activity in the crypto market and drive higher trading volumes for altcoins and digital assets.
Financial experts believe that investor confidence has remained stable despite the ongoing delays. The combination of high demand and paused regulatory reviews may lead to a sharp market response once approvals begin. Some analysts describe this period as a potential strategic entry point for investors before a post-shutdown rebound.
Legal Experts Weigh In on SEC Approval Process
Fox Business journalist Eleanor Terrett explained that not all ETFs require direct SEC approval. She noted that the Teucrium XRP ETF, registered under the Investment Company Act of 1940, did not need explicit authorization. Since it holds Treasuries, cash, and swap receivables instead of digital assets, it went into effect automatically after the statutory waiting period.
However, spot crypto ETFs registered under the Securities Act of 1933 do require active SEC approval. These include products for Litecoin (LTC), Solana (SOL), and XRP. Legal analyst Bill Morgan stated that ETF approvals are managed by the SEC’s Division of Corporation Finance, which may still perform essential functions during a shutdown. Yet he cautioned that “delays are still possible as the agency reduces its activities.”
Morgan added that approvals could still occur in late October if the government reopens in time, though uncertainty remains. “Crypto never fails to surprise,” he remarked, summing up the cautious optimism shared by many in the market.
