As of January 31, 2026, U.S. financial regulation has almost ground to a halt.
Indeed, the government failed to pass a budget, forcing the Securities and Exchange Commission (SEC) to operate according to its shutdown plan.
It is important to note that the SEC is not completely closed; it barely works. For example, the EDGAR system, through which companies submit declarations, is still in operation.
At the same time, most SEC staff are not working, meaning few people actually review or approve these filings.
As a result, employees who normally approve crypto ETFs, review registration statements, and explain new rules are largely unavailable.
Instead, only a small emergency team remains active, authorized to respond only to emergencies related to “market integrity and investor protection.”
Apart from these rare cases, everything else has been suspended.
The approach is not new
In fact, this is the same process the SEC follows every government shutdown. When there is no immediate emergency, normal regulatory work simply stops.
Needless to say, for the crypto industry this has real consequences.
Recent regulatory progress has suddenly come to a halt, meaning decisions, approvals and regulatory clarity are now delayed until government reopens.
At the executive level, SEC Chairman Paul Atkins has already had to delay several important updates that the crypto industry has been waiting for.
Many people were hoping that Congress would finally pass clear crypto laws in 2026. But the shutdown makes it much harder for lawmakers from both parties to work together.
Bloodstain Market
That said, this regulatory pause comes at a bad time for the cryptocurrency market.
Prices have already fallen, with the total market falling more than 6%, to around $2.64 trillion. Bitcoin (BTC) recently fell to around $78,000, while Ethereum (ETH) fell to almost $2,400.
At the same time, the ETF market is also under strain.
What more?
This further coincided with the United States finally entering a new phase of action regarding crypto regulation.
Top officials from the SEC and the Commodity Futures Trading Commission met and agreed to work together more closely.
Their goal was to end lengthy turf battles, create clearer rules, reduce duplicate work for businesses, and finally give the crypto market the guidance it was asking for.
However, with the government shutdown, these projects are effectively on hold.
Final Thoughts
- The shutdown transformed regulatory dynamics into uncertainty, reversing weeks of progress in just a few days.
- Market pressure is increasing, with falling prices and slowing ETF momentum worsening investor confidence.
