The US government shutdown, which began on October 1, has significantly slowed operations at the Securities and Exchange Commission (SEC), halting the approval process for long-awaited spot crypto ETFs.
For the fourth consecutive time, spending proposals to reopen the government have been rejected by lawmakers from both parties, extending the shutdown into next week.
During a shutdown, the SEC can only address urgent matters like fraud and market emergencies, while routine work—including processing initial public offerings (IPOs), exchange-traded funds (ETFs), and other filings—is paused.
This has put spot crypto ETF approvals for assets like Litecoin (LTC), Solana (SOL), and XRP on hold until government funding is restored, as formal approval from the SEC's Division of Corporation Finance is required before trading can commence.
Despite the delay, altcoin prices saw a significant recovery, with LTC surging 17%, SOL 16%, and XRP 9% over the past week, aligning with Bitcoin's surge to near record highs and broader market optimism.
Bloomberg ETF expert Eric Balchunas likened the situation to a "rain delay," emphasizing the temporary nature of the pause and industry frustration.
An SEC spokesperson confirmed that the shutdown has hindered their ability to respond to press inquiries, and the delay follows the SEC's recent decision for crypto ETF issuers to withdraw their 19b-4 filings.
This move came after the approval of generic listing standards that eliminate the need for individual filings, potentially allowing crypto ETFs to go effective on a rolling basis once the shutdown ends, paving the way for a cascade of launches.
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