The US government shutdown is now in its 38th day, making it the longest in American history. What started as a budget disagreement has turned into a complete shutdown of federal operations. Due to this political impasse, major bills have stopped moving forward in Congress, including the CLARITY Act, a key piece of legislation that could finally bring clear rules to the crypto industry.
The government still blocked, the economy suffers
The Senate is preparing to vote on a funding bill that could reopen the government. To pass, Republicans and Democrats must agree. The problem holding everything back is not crypto or spending, but healthcare. Democrats want to expand tax credits that will help millions afford health insurance. Republicans want to reopen the government first, then discuss health care later.
As a result of this shutdown, approximately 1.4 million federal workers are trapped and nearly half a million are not paid. Many have already missed their salaries, causing financial strain. Government services are slowing, airports are understaffed and federal agencies have suspended important work.
That said, even food assistance programs are also affected. A court recently ordered the government to fully fund SNAP, a program that helps 42 million Americans buy groceries, after payments were cut. The government appealed the decision, saying Congress must approve the funding.
Economists say the shutdown is hurting the economy. Every week that the government remains closed, the United States loses between $10 billion and $30 billion. Growth could fall by as much as 2% and small businesses that rely on public funds are running out of cash.
Crypto Regulations Are Frozen in Place
The shutdown not only affects workers, it has crippled crypto progress. Agencies like the SEC and CFTC operate with minimal staff. This means that crypto ETF application reviews are on hold, delaying decisions that investors have been waiting for.
The CLARITY Act, a bipartisan bill that would finally define how cryptocurrencies and stablecoins are regulated, was poised to move forward. Senators involved in the bill said discussions were happening daily and a vote could happen before Thanksgiving. Coinbase CEO Brian Armstrong even said that almost 90% of the bill had already been paid.
But with the government closed, nothing can move. Washington is frozen, and so is progress in crypto.
The crypto market is starting to feel the impact
The closure also affects the markets. With government agencies unable to release funds, liquidity is tightening and investors are becoming cautious. Bitcoin has retreated from recent highs as uncertainty increases. Prediction platforms reflect the same vibe. According to traders at Polymarket, there is almost a 60% chance that the shutdown will continue beyond November 16.
Analyst Tyler points out the irony that while everything seems frozen in Washington, discussions about digital assets and crypto policy are the only things still moving forward.
FAQs
What is the impact of the US government shutdown on the economy?
The shutdown slows services, cuts workers’ wages and costs the economy billions each week, with risks to growth increasing the longer it lasts.
Why is the shutdown delaying crypto regulation?
Federal agencies like the SEC and CFTC are understaffed, halting reviews and freezing progress on major crypto bills like the CLARITY Act.
What is the CLARITY Act and why is it important?
The CLARITY Act aims to establish clear rules for cryptocurrencies and stablecoins. Its delay leaves investors and businesses without necessary regulatory guidance.
How long could the American paralysis last?
Forecasts show the shutdown could extend beyond Nov. 16 unless Congress reaches an agreement on funding and health care disagreements.
How does the shutdown impact crypto markets?
Uncertainty tightens liquidity and weighs on prices. Bitcoin and other crypto assets react as delays block regulatory decisions.
