As the United States prepares for a potential government shutdown, the crypto market finds itself in a precarious position. With the SEC possibly reducing its oversight, the threat of scams and market instability is on the horizon. This situation raises questions about how the shutdown will affect crypto regulations, market dynamics, and investor sentiment.
Shutdown's Consequences for Crypto
The impending government shutdown is primarily due to a lapse in appropriations. The SEC is making preparations for the situation, but it’s clear that a shutdown will impact their operations. Prioritizing market integrity and investor protection is a must, but routine operations—including the review of ETF applications—could be disrupted.
The SEC's internal EDGAR database will remain functional, and they can still take action against fraud and manipulation. However, they will be unable to inspect or provide updates on crypto ETFs. Other agencies, like the Federal Reserve, will continue to operate as they are funded independently of congressional appropriations.
Market Reaction and Investor Anxiety
Without the SEC's regulatory oversight, crypto markets might see increased volatility and the potential rise of scams. Following the news of a possible shutdown, major cryptocurrencies like Bitcoin, Ethereum, and Solana have experienced significant losses. Bitcoin traded at around $104,000 but has fallen to $96,522.38 in 24 hours, reflecting a 5.73% decrease. Ethereum has dropped 9.85% to $3,511.62, and Solana is down 13% to $196. In total, over $1.1 billion has exited the market in the past day alone.