U.S. Government Shutdown Could Delay Spot Crypto ETF Approvals

The post U.S. Government Shutdown Could Delay Spot Crypto ETF Approvals appeared first on Coinpedia Fintech News

As speculation rises over how a U.S. government shutdown might affect crypto ETF approvals, legal expert Bill Morgan responded to a detailed post from Fox Business journalist Eleanor Terrett, offering cautious optimism about the timeline.

Spot ETFs Require Explicit SEC Approval

Eleanor Terrett explained that not all ETFs follow the same path to market. She highlighted the Teucrium XRP ETF, which is registered under the Investment Company Act of 1940. Because it holds Treasuries, cash, and swap receivables rather than crypto itself, it did not require explicit SEC approval. The ETF went into effect automatically once the statutory waiting period expired.

In contrast, Terrett clarified that spot crypto ETFs, such as those for Litecoin (LTC), Solana (SOL), or XRP, are registered under the Securities Act of 1933. These products must receive active SEC approval before launching, meaning they are directly affected by any disruption in the agency’s operations.

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Bill Morgan’s View on Shutdown Impact

Bill Morgan expanded on this point, noting that ETF approvals are handled by the SEC’s Division of Corporation Finance, which may continue some of its essential functions during a funding halt. However, he cautioned that delays are still possible as the agency reduces its activities.

Morgan suggested that while the shutdown could slow progress, late October approvals remain possible if the government reopens in time. Reflecting the uncertainty of the moment, he remarked: “Crypto never fails to surprise.”

Community Reaction

Morgan’s comments sparked engagement on X, with Eleanor Terrett thanking him for his “fair and honest assessment.” Others in the community voiced mixed feelings from optimism about XRP’s long-term potential to frustration at the slow pace of regulatory progress. This reflects a broader sentiment of cautious hope: while the shutdown may stall ETF approvals in the short term, many remain confident that the process will eventually move forward.

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FAQs

How does a government shutdown affect the SEC and crypto?

A shutdown forces the SEC to reduce operations, potentially pausing its review and approval processes for new financial products like spot crypto ETFs.

What is the difference between a spot crypto ETF and other ETFs?

Spot crypto ETFs hold the actual asset and require explicit SEC approval. Other ETFs may hold derivatives and can launch automatically after a waiting period.

Could a shutdown stop all ETF approvals?

Not all. ETFs registered under the 1940 Act can launch automatically. However, spot crypto ETFs need active SEC approval, which a shutdown would likely delay.