After a 43-day hiatus, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are preparing to resume full operations. The government shutdown, which began in early October, has ended following the signing of a funding bill by U.S. President Donald Trump late Wednesday. Employees of both agencies are expected to return to work on Thursday, marking the end of a prolonged period of uncertainty for the financial regulatory landscape.
The shutdown significantly curtailed the SEC's and CFTC's activities, leading to a backlog of pending actions and new challenges. The SEC, responsible for overseeing securities markets, saw its ability to review applications for exchange-traded funds (ETFs), including those related to cryptocurrencies, severely hampered. Similarly, the CFTC, which regulates commodity futures and options markets, experienced a broad disruption to its enforcement, market oversight, and regulatory rulemaking efforts.
With the government reopened, both agencies face the immediate task of catching up on the work accumulated during the shutdown. This includes processing registration applications, addressing enforcement matters, and advancing regulatory initiatives. Some companies strategically submitted IPO and ETF applications during the shutdown, anticipating that their filings would be in the queue for review upon the agencies' return to full staffing.
The SEC is expected to prioritize "exemptive relief" for tokenization and crypto businesses and continue its investigation into digital asset vault companies. Several crypto ETFs for SOL, Litecoin, and HBAR launched during the shutdown may face further SEC scrutiny. These ETFs may be subject to automatic effect, supplementary inquiries, or even temporary suspension as the SEC resumes its activities.
CFTC Acting Chair Caroline Pham has announced plans to push forward with "spot crypto trading and tokenized staking" this year. Discussions are reportedly underway regarding the potential launch of leveraged spot trading as early as next month. The agency's focus will also include advancing regulatory clarity for digital assets.
Legislative efforts are also in progress to provide a clearer framework for digital asset regulation. The Senate Banking and Agriculture Committees are working on bills to define the powers of the SEC and CFTC in this sphere, as well as to classify "auxiliary assets". These legislative initiatives will need to be harmonized into a unified bill for presidential approval.
The extended government shutdown has underscored the potential risks of repeated disruptions to regulatory oversight. As noted by Jay Dubow, a partner at the law firm Troutman Pepper Locke, critical matters can "slip through the cracks" during such periods, potentially undermining market stability and investor protection. The SEC and CFTC will need to work diligently to address the backlog of pending matters and ensure continued vigilance in overseeing rapidly evolving financial markets.
