Government shutdown threatens crypto landscape, extends to second longest period

The U.S. government entered its fourth week of shutdown on Wednesday, surpassing the second-longest shutdown in history, but even if the federal shutdown has not yet taken a direct hit, the crypto industry is lamenting that big-ticket items are being affected.

A government shutdown means the Senate will focus primarily on the task of reopening the government, largely pushing aside other policy pursuits. This period was supposed to be a window into crypto action, with the Senate regulating the U.S. crypto market on par with the House’s Digital Asset Market Transparency Act. This overarching goal for the industry may not be achieved in 2025.

“Politically, time is running out to introduce major legislation,” said Cody Carbone, CEO of the Digital Chamber. But potentially more damaging than the political costs may be that the industry misses out on much-needed U.S. tax policy. “Lack of tax clarity and missed opportunities to establish reasonable tax treatment may end up costing more in the long run.”

During the shutdown, federal agencies can only send in employees deemed essential. This not only hampered Congress’ efforts on cryptocurrencies, but also prevented federal regulators from working on rules for cryptocurrency governance, such as regulating stablecoins and working online at the Securities and Exchange Commission to develop digital asset market proposals.

However, work continues as usual in some crypto policy areas, including an example shared by Custody Bank CEO Caitlin Long, who said the company’s U.S. patent issues were resolved during the shutdown.

“We’re not feeling it,” she told an audience at DC FinTech Week in Washington.

However, the suspension of certain SEC initiatives, such as approval of exchange-traded products (ETPs) and initial public offerings, could have a negative impact on the sector in the long term.

So far, market forecasts predict that the latest government shutdown will likely exceed the longest on record during President Trump’s first term in the White House. The record is 35 days, still about two weeks away, but the Polymarket-Carsi deal is expected to open its doors again in mid-November.

“We encourage lawmakers to find a way out of the shutdown,” Carbone said. “Not only the crypto industry but Americans are feeling the pinch as well.”

Kristin Smith, president of the Solana Institute for Policy Studies, said in a post on social media site

“The evolution of digital asset policy is not standing still,” Summer Mersinger, CEO of the Blockchain Association, said in a statement to CoinDesk. “Even in the midst of a shutdown, the work to build smart and durable rules for cryptocurrencies continues.”

Read more: The state of cryptocurrencies: What will happen to cryptocurrencies if the government shutdown drags on?

Updated (October 22, 2025, 17:38 UTC): Added comment from Blockchain Association.