If Congress fails to agree on a funding bill by September 30, there is a possibility that the U.S. government might face a shutdown. This situation could have significant consequences for the financial sector, particularly regarding the approval of exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC).
According to NYDIG, a prominent provider of Bitcoin-related services, the duration of a government shutdown could range from one to 35 days, depending on the political landscape. Consequently, this could impede the SEC’s capacity to assess and make decisions regarding various ETF applications, specifically those about Bitcoin and Ethereum.
Bitcoin Spot ETFs Face Uncertainty
The SEC has delayed multiple decisions regarding spot Bitcoin ETFs. These ETFs would offer investors the opportunity to buy and sell Bitcoin directly through a regulated platform. Noteworthy applicants include BlackRock, Invesco, Bitwise, and Valkyrie.
The SEC recently experienced a delay two weeks before the October 16 to 19 deadlines. This development suggests that the regulatory body is preparing for a potential shutdown. As a result, the SEC now faces a final decision deadline in mid-March for these applications.
Bloomberg ETF analyst James Seyffart predicts that there may be similar delays for other applicants, namely Fidelity, VanEck, and WisdomTree. He also suggests that the SEC might adopt a consistent approach towards all ETFs by reviewing and approving or rejecting them simultaneously.
Ethereum Futures ETFs Set to Launch
Futures-based Bitcoin ETFs have already been launched in the U.S., providing investors with an opportunity to track and profit from Bitcoin’s price movements through regulated exchanges. While spot Bitcoin ETFs are still awaiting approval, these futures-based alternatives have gained significant popularity since their introduction in October 2021, attracting billions of dollars in assets.
Several issuers have recently filed applications with the SEC to launch Ethereum ETFs based on futures. These ETFs would track the performance of Ethereum futures contracts traded on the Chicago Mercantile Exchange (CME), which started operating in February 2021.
The Securities and Exchange Commission does not consider spot Ethereum ETFs. No issuer has yet applied to such a product. Consequently, individuals who wish to buy or sell Ethereum directly will experience longer waiting times compared to those who prefer futures-based products.
Following the uncertainty surrounding ETF approvals and the government shutdown, Bitcoin’s value faces a miner decrease of 0.38%, reaching $26,933. On the contrary, traditional assets experienced losses on that very day. Specifically, gold saw a decline of 0.96%, and stocks in general also decreased – with the S&P 500 dropping by 0.27% and the Nasdaq Composite with a slight increase of 0.14%.
Moody’s recent report suggests that a government shutdown could harm the U.S. credit rating. The rating agency emphasizes that such an event would underscore the ongoing challenges in achieving bipartisan agreement on fiscal policy and raise doubts about policymakers’ capability to tackle more substantial fiscal issues in the future.
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