The longest government shutdown in U.S. history is hurting the crypto industry, too.<\/p>\n
As the impasse in Washington stretches into its record-breaking<\/a> fourth week, the closure of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) has put key developments \u2013 namely, the approval and launch of products and services involving cryptocurrencies \u2013 on hold.<\/p>\n Notably, the launch of Bakkt\u2019s bitcoin futures market was delayed<\/a> in part by the company\u2019s inability to secure approvals before Dec. 22, 2018, when the shutdown began. The platform, created by Intercontinental Exchange (parent of the New York Stock Exchange), is in a holding pattern until regulators can open a 30-day public comment period. A new launch date for the platform, which most recently was set for Jan. 24, has yet to be announced.<\/p>\n This lack of approval has not deterred Bakkt from building up its platform: the company announced Monday it was acquiring parts of independent futures commission merchant Rosenthal Collins Group (RCG) to bolster its regulatory compliance chops<\/a>.<\/p>\n \u201cWe made great progress in December,\u201d Bakkt CEO Kelly Loeffler wrote in post published on Medium<\/a> on New Year\u2019s Eve, \u201cand we\u2019ll continue to onboard customers as we await the \u2018green light.’\u201d<\/p>\n Other startups are in a similar state of limbo.<\/p>\n ErisX, a trading platform that recently raised<\/a> $27.5 million from prominent investors, is also waiting for furloughed federal employees to return to work. The platform aims to be a regulated futures market and clearinghouse, which requires approval from the CFTC.<\/p>\n \u201cErisX\u2019s interaction with the CFTC has been both positive and productive,\u201d CEO Thomas Chippas told CoinDesk, adding:<\/p>\n \u201cDuring this government shutdown we have continued our platform development efforts. We look forward to this current impasse being resolved and re-engaging with [CFTC] staff on our DCO [derivatives clearing organization] application.\u201d<\/p>\n Exchanges aside, even certain products are now potentially at risk.<\/p>\n Perhaps one of the most highly anticipated bitcoin-related products is an exchange-traded fund, or ETF. The SEC currently has one rule change proposal sitting before it, filed<\/a> by VanEck, SolidX and Cboe.<\/p>\n The proposal has already been delayed a number of times, and now faces a final deadline of Feb. 27. If the SEC does nothing, under existing law, the proposal would be approved. Specifically, Title 15 of the U.S. Code<\/a> states that any proposed rule changes \u201cshall be deemed to have been approved by the [SEC] if \u2026 the [SEC] does not issue an order approving or disapproving the proposed rule change.\u201d<\/p>\n However, some legal experts say an approval-by-default is unlikely to happen, even if the shutdown drags on.<\/p>\n Ethan Silver, chair of the broker-dealer practice at law firm Lowenstein Sandler, anticipates that, should the shutdown continue, any staffers who remain on duty would reject the application.<\/p>\n \u201cI think if they were forced to deal with it, they would sooner deny it than be put in a position [where it is approved on a technicality],\u201d he said, explaining that the regulator would likely cite \u201cmarket integrity\u201d or a similar emergency contingency as a reason for the denial.<\/p>\n Similarly, Jake Chervinsky, a lawyer with Kobre & Kim,\u00a0<\/strong>said on Twitter<\/strong><\/a>\u00a0that the SEC would likely find some way to reject the proposal during a protracted shutdown, a view\u00a0<\/strong>also shared<\/strong><\/a>\u00a0by attorney David Silver of the Silver Miller law firm.<\/strong><\/p>\n The commission has yet to approve any crypto ETFs, rejecting nearly a dozen in 2018. That has not yet deterred companies from trying to be the first to bring such a fund to market, however. Just last week, Bitwise Asset Management announced<\/a> its intention to launch a bitcoin ETF with NYSE Arca.<\/p>\n While the company has filed an initial registration form, NYSE Arca has not yet submitted the rule change proposal, and so the SEC cannot yet consider the ETF.<\/p>\n Beyond launches, the crypto space \u2013 at least in the U.S. \u2013 is still waiting for increased clarity and official guidance on how to safely handle digital assets.<\/p>\n Vince Molinari, co-founder of the regulated trading platform Templum, told CoinDesk that initiatives the SEC may have planned, such as guidance on custody, are likely to be delayed.<\/p>\n \u201cI think the entire space gets pushed back,\u201d he said. \u201cIt could be a quarter or two before things go back, it could be longer depending on how long the shutdown\u2019s in effect.\u201d<\/p>\n Compounding the issue, he noted, is that even after the shutdown ends, staffers have to catch up on anything they missed during the furlough.<\/p>\n \u201cThere\u2019s talk about the [initial public offering] calendar being pushed back,\u201d he said.<\/p>\n Mining manufacturer Canaan<\/a> is at least one crypto firm reportedly considering a U.S. IPO. While the company is said to be in the early stages of this decision, Molinari believes an extended shutdown could postpone IPO approvals \u201cindefinitely.\u201d<\/p>\n The issues mirror those faced by the financial technology sector in the U.S. more broadly, as noted in an analysis piece published by Roll Call<\/a>, a news site focused on the U.S. federal government.<\/p>\n Roll Call noted that the CFTC, which has requested information<\/a> on ether and the ethereum network, is unable to review any comments already submitted. In its request for information, the CFTC noted that any submissions would \u201cadvance [its] mission of ensuring the integrity of the derivatives markets,\u201d which may indicate the regulator is assessing a potential ether futures market<\/a>.<\/p>\n As regulatory activity slows to a halt, a crypto industry group is focusing its efforts on Capitol Hill, where lawmakers in the House and Senate are still open for business.<\/p>\n \u201cWe\u2019ve been making real progress engaging with lawmakers and regulators on the merits of the token economy in the last several months, but the shutdown puts the handbrake on some of those conversations,\u201d Kristin Smith, director of external affairs for the Blockchain Association<\/a>, told CoinDesk.<\/p>\n She added:<\/p>\n \u201cThere are pressing concerns on a number of fronts \u2013 taxes, SEC guidance, Treasury guidance \u2013 and the shutdown, at the very least, pushes those issues to the back burner for the foreseeable future.\u201d<\/p>\n The SEC could not be reached for comment. When contacted via email, a spokesman\u2019s auto-reply explained:<\/p>\n \u201cDue to a lapse in appropriations for the federal government, the U.S. Securities and Exchange Commission is currently closed. I am currently out of the office, and will return to the office once an appropriation has been enacted. During the closure, I will not be monitoring or responding to my emails. Thank you.\u201d<\/p>\n Read the full article:<\/p>\nWhen ETF?<\/h2>\n
Please advise<\/h2>\n
Eyes on the Hill<\/h2>\n