SEC and CFTC Employees Return After Government Shutdown

According to Cointelegraph, employees of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are set to resume work following a 43-day furlough due to the U.S. government shutdown. The return is scheduled for Thursday, after U.S. President Donald Trump signed a funding bill late Wednesday to restore federal operations. The operational plans of both agencies stipulate that staff should return on the next regularly scheduled workday after the enactment of appropriations legislation, a detail confirmed by acting CFTC chair Caroline Pham in a Thursday post on X. During the shutdown, both the SEC and CFTC operated with reduced staff and limited functions. The SEC's ability to review applications for exchange-traded funds, including those related to cryptocurrencies, was notably impacted. The CFTC's operations were largely halted, affecting enforcement, market oversight, and regulatory rulemaking efforts. With the government reopening, the agencies are expected to need time to catch up on activities such as reviewing registration applications submitted during the shutdown period. Some companies took advantage of the situation by submitting IPO and ETF applications, anticipating the end of the shutdown. Jay Dubow, a partner at law firm Troutman Pepper Locke, noted that some companies might have submitted applications to the SEC knowing they would not be reviewed immediately but would at least be in the queue. He also highlighted the risks associated with repeated shutdowns, suggesting that important matters could slip through the cracks. Throughout the shutdown, officials from both agencies continued to speak at conferences, discussing their approach to cryptocurrencies and addressing operational limitations. SEC Chair Paul Atkins remarked on the agency's restricted functions during a conference on October 7, emphasizing the limitations on staff activities. Before the funding bill was resolved, Atkins mentioned plans for the SEC to consider establishing a token taxonomy anchored in the Howey test, aiming to recognize that investment contracts can conclude. Similarly, Pham indicated that the CFTC had been advocating for the approval of leveraged spot cryptocurrency trading by December. Meanwhile, Michael Selig, chief counsel for the SEC’s crypto task force, is scheduled to appear before the Senate Agriculture Committee as part of President Trump's initiative to confirm him as the next CFTC chair. Although the hearing could have proceeded during the shutdown, Selig's authority would have been limited had he been confirmed. Pham is expected to step down from her acting chair position if Selig is confirmed, but the CFTC would still face leadership challenges, with only one Senate-confirmed commissioner out of the usual five.