The United States House of Representatives passed a stopgap funding bill on Saturday, taking a crucial step to avoid a government shutdown. Hours before available funding was set to expire, the bill passed on a 335-91 vote, with significant bipartisan support. This timely decision caused fluctuations in financial markets and raised questions about its impact on the cryptocurrency industry. Here are the details…
The temporary measures crisis is over
The interim measure, introduced and approved by House Speaker Kevin McCarthy, aims to extend government funding for 45 days. However, its continuation depends on the approval of the Democrat-dominated Senate and President Joe Biden. This development marks a significant change from earlier in the week, when a government shutdown appeared imminent. The threat of a shutdown had been exacerbated by a group of hard-line Republicans who rejected numerous temporary funding proposals and instead pushed for deep spending cuts. The proposed bill maintains current government funding levels without controversial spending cuts that Democrats find unacceptable.
Notably, it does not include funding for Ukraine, which has been a focal point in President Biden’s administration’s stance against the Russian invasion. The specter of a government shutdown has increased uncertainty in financial markets, including the cryptocurrency sector. A few important results stand out:
- Law Enforcement and Legal Processes: Fortunately, law enforcement agencies such as the FBI and ongoing legal cases regarding cryptocurrencies are expected to proceed without significant disruption, with 84% of Department of Justice personnel exempt from furlough.
- SEC Operations: The Securities and Exchange Commission (SEC) faces a more significant challenge. In the event of a shutdown, the SEC is expected to operate with only 9.5% of its staff. This may lead to delays in decisions regarding cryptocurrency Exchange Traded Funds (ETFs). The SEC has already begun delaying decisions on most ETFs, and a crucial deadline is approaching on January 10, 2024, when the agency is expected to decide the fate of spot Bitcoin ETFs.
- Ethereum’s Unique Position: Ethereum futures ETFs are in a more favorable position as they approach their launches. However, spot Ethereum products may not receive the same priority as other cryptocurrencies due to SEC staffing limitations.
- Cryptocurrency Performance: Amid this uncertainty, Bitcoin has shown relative resilience with a price increase of 1.9%. Traditional safe haven assets such as gold experienced a decrease of 2.9%. While stocks and bonds also showed a downward trend, oil prices gained 2.3%.
Testing for cryptocurrencies
The ongoing political stalemate in Washington DC is a test for cryptocurrencies. It raises the question of whether Bitcoin and other crypto assets can solidify their reputation as alternative assets and “digital gold” in times of crisis. Only time and potentially the decisions of the US Congress will answer this question. As the country closely watches how this funding crisis will unfold, cryptocurrency enthusiasts and investors will be watching the SEC’s decisions and the broader financial environment for clues about the future of crypto assets in the face of political uncertainty.
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