Government Shutdown Puts Senate Consideration of Clarity Act on Hold

With the U.S. Senate currently focused on issues surrounding the government shutdown, it is running out of time to consider bills related to the regulation of the crypto market. For example, the Senate bill to match the House of Representatives’ Digital Asset Market Clarity Act has been a top goal of the crypto industry, and is now being halted.

With only essential employees of federal agencies allowed to work during the shutdown, regulators’ work has been halted, including the Securities and Exchange Commission’s (SEC) consideration of exchange-traded products (ETPs) and initial public offerings, according to PYMNTS.

The SEC expressed uncertainty about whether it would approve new filings for ETFs looking to offer extreme leverage. The SEC said that since the beginning of the shutdown, several asset managers submitted registration statements for ETFs proposing leverage levels much higher than the daily returns of underlying equities.

To make it easier for companies to go public during the shutdown, the SEC said it would not penalize companies that omitted their pricing information from initial public offerings during the shutdown if they then listed during or after the shutdown. This change was made because officials have not been able to go over registration statements during the shutdown.

The Clarity Act, which passed in the House in July, would establish a broad regulatory structure for digital assets. Democrats who had supported the bill in committee in the House started to back away due to pressure from party activists and liberal members, so the fate of the bill in the Senate remains uncertain.