TD Cowen: The U.S. government shutdown severely impacts the SEC, and all encryption policy progress is halted.

The U.S. government officially shut down amid a budget impasse in Congress, resulting in a halt of federal agencies and causing a standstill in the progress of crypto regulation. Investment bank TD Cowen pointed out on 10/6 that the U.S. Securities and Exchange Commission (SEC) was forced to drastically reduce its workforce, leading to a near-complete freeze of all policy reviews, exemption programs, and new product development related to Crypto Assets.

The U.S. government shutdown triggers a complete halt in policy review.

According to reports, the U.S. Congress failed to pass a new round of funding agreements last week, officially entering a government shutdown, forcing tens of thousands of federal employees to take unpaid leave. In response, TD Cowen pointed out on 10/6 that this shutdown not only affects government operations but also temporarily paralyzes the SEC's daily policy reviews.

TD Cowen pointed out that the SEC currently retains only a "very small number of personnel" to handle emergencies, while all non-urgent business has been fully suspended. This means that the review of Crypto Assets ETFs, tokenized product exemptions, and related policy adjustments have all been forced to a halt.

( The U.S. government may shut down! Trump threatens permanent layoffs, budget disputes between the two parties escalate )

SEC has postponed the exemption review, and the Crypto Assets policy is completely stalled.

Jaret Seiberg, head of the TD Cowen Washington research team, stated that the SEC has been evaluating whether to grant a "safe harbor review" for new types of encryption products since the Trump administration took office, allowing certain tokenized stocks and digital asset operators to operate legally.

However, with the government shutdown, these jobs have completely stopped. Seiberg pointed out:

"This is not just a matter of pausing for a few days. Even if the government resumes operations afterward, once the SEC employees return to their posts, they will first have to handle the urgent matters that accumulated during the shutdown, so the overall delay could far exceed the number of days the agency was closed."

ETF review is on hold, and the market's attention has shifted to policy focal points such as the Fed and OCC.

TD Cowen pointed out that the SEC was about to approve or deny several crypto ETF cases, but with the government shutdown, relevant progress has come to a complete halt. TD Cowen believes that during this period, the focus of crypto policy may shift to other financial regulatory agencies that are still operational, such as the Federal Reserve (Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC).

Seiberg emphasized that the market will closely observe whether banks will use this time to promote stablecoin-related businesses, such as issuing USD stablecoins, acting as custodians for Crypto Assets, or developing token-based payment systems.

Delays may last for weeks, and the Crypto Assets reform is in a "freeze period".

TD Cowen warns that a government shutdown could last for several weeks or even longer, and the SEC's push for encryption regulatory policies will therefore be stalled. TD Cowen finally stated:

"We do not see the SEC being able to restore any policy progress related to Crypto Assets before the government reaches a consensus on the funding agreement."

The government shutdown inevitably involves Kalshi and Polymarket, as users bet wildly.

On the prediction market platforms Kalshi and Polymarket, many investors have started betting that the shutdown could last for several weeks. According to Kalshi's market data, the current probability of the shutdown lasting more than 15 days is 64%, while the probability of it lasting more than 25 days is 31%.

Polymarket shows that 23% of participants believe this will break the longest record of 35 days during Trump's term (, while 78% expect it to end after 10/15.

)Fearless of the US government shutdown, the S&P 500 hits a new high, BTC returns to 118K(

This article TD Cowen: The U.S. government shutdown severely impacts the SEC, all progress on Crypto Assets policy is halted. First appeared in Chain News ABMedia.