In addition to restrictions on enforcement actions and ongoing litigation, the agency will likely stop reviewing crypto ETF applications.
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Members of the US Securities and Exchange Commission (SEC) began shutting down operations on Wednesday under a lapse in government funding, with most staff directed to secure their work and prepare for what could be a days-long pause in operations.
According to a Wednesday on X, about nine hours after US lawmakers were unable to pass a bill to continue funding the government, the SEC was operating in accordance with a plan set up in August. The plan that the agency would have an “extremely limited number of staff” and many of its systems would operate “under modified conditions.”
“On the first workday of a lapse in appropriations, non-excepted staff will engage in activities to shut down their respective operations, to secure their workstations and work materials, and to prepare for the rapid restart of operations when funding is renewed,” said the SEC.
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What exactly can the SEC do for crypto during a shutdown?
In addition to limited staff, the agency said it will “not engage in ongoing litigation,” except for emergency cases or those involving a threat to property. This suggested that any enforcement actions against crypto companies could be effectively paused until the shutdown ends.
The SEC will also be unable to review any registration applications, “engage in non-emergency rulemaking,” oversee self-regulatory organizations, and provide “non-emergency assistance” to foreign regulatory authorities. Cryptocurrency-linked exchange-traded fund (ETF) applications awaiting approval will likely be put on hold under these requirements, but the SEC’s electronic filing system will continue to accept submissions.
For example, several Solana () ETFs are currently awaiting approval. Many experts had would sign off on the investment vehicles for trading on US exchanges by mid-October, but that timeline could be delayed amid a government shutdown.
No end to the shutdown in sight
At the time of publication, there had been no reported deal between Republicans and Democratic lawmakers on a stopgap measure to fund the US government.
Mike Johnson, Speaker of the House of Representatives, reportedly on Wednesday that the chamber would return next week, but Republicans would not be open to any changes in their proposed funding bill. Democrats have so far held the line, asking for a reversal in many of the healthcare cuts from a Republican-backed budget bill signed into law in July.
The SEC’s operations plan will allow employees to return to work on the “next regularly scheduled workday following enactment of appropriations legislation.”
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