Government Shutdown Looms: Impact on Digital Asset Legislation

Unless Republicans negotiate with Democrats and agree on a bipartisan funding bill, the US government is set to shut down at midnight on Tuesday. This would likely postpone any discussions regarding a digital asset market structure bill in the Senate.

On Monday, leaders from the US House of Representatives and Senate are slated to meet with President Donald Trump to negotiate terms to avert a shutdown. Despite holding the majority in both chambers of Congress, Republicans require additional backing from Democrats to pass a temporary funding bill. Democrats are calling for a reversal of certain healthcare cuts from a budget bill enacted in July, referred to as the “One Big, Beautiful Bill.”

A shutdown would halt US lawmakers from considering or voting on any bills currently progressing through Congress, including those needing Trump’s signature and potentially regulatory actions from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). This scenario would likely delay the digital asset market structure bill, which was already pushed from the end of September to October.

Prediction market chances on the US government shutting down by Oct. 1. Source: Polymarket

Historically, partial or complete government shutdowns due to policy disagreements have occurred since the Reagan administration in the 1980s. Trump previously oversaw the longest shutdown in US history, which lasted 35 days between 2018 and 2019 over a border wall proposal. During a shutdown, the focus of lawmakers typically shifts toward governmental funding rather than unrelated proposals like crypto market structure.

What to Expect from Negotiations?

Trump remarked last week that “no meeting with [Democratic] Congressional Leaders could possibly be productive” in preventing a shutdown, with the White House later stating that the president was unwilling to negotiate. Nevertheless, Trump is set to meet with House Minority Leader Hakeem Jeffries, Senate Minority Leader Chuck Schumer, House Speaker Mike Johnson, and Senate Majority Leader John Thune on Monday.

Thune mentioned in a Sunday interview that Republicans had a “simple, seven-week funding resolution” designed to provide temporary government funding through November. Jeffries countered this characterization of the measure as a “clean bill” last week, asserting that it failed to address Democrats’ demand to reverse the healthcare cuts from the July spending bill.

The Senate’s market structure bill, also known as the Responsible Financial Innovation Act, is intended to build upon the CLARITY Act that passed in the House in July, clarifying the roles of the CFTC and SEC in overseeing digital assets.

Wyoming Senator Cynthia Lummis, a significant Republican advocate for the bill, aimed to have it approved by the banking committee by the end of September. Reports indicated that the committee postponed its consideration to late October, and a government shutdown could further push this timeline.

Should negotiations falter and no agreement on a funding bill occur, the US government will shut down at midnight Tuesday.

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