Crypto News Today: U.S. Crypto Regulation Faces Uncertainty as Government Shutdown Continues, Stalls Progress

Key TakeawaysCrypto regulation bill faces delays amid the second-longest U.S. government shutdownLawmakers and industry executives clash over new DeFi and stablecoin rulesOngoing shutdown halts SEC and CFTC activity, raising risks for investor confidence and ETFs The state of crypto regulation in the U.S. remains uncertain as the ongoing government shutdown stalls progress on the crypto market structure bill, delaying key decisions on stablecoins, ETFs, and digital asset oversight. Political Gridlock Freezes Crypto Progress, Results of Democrats-Crypto Industry Leaders Roundtable UnclearTensions and deliberations between U.S. lawmakers and crypto industry executives over the long-awaited crypto market structure bill reached a peak this Wednesday. This followed a Democratic proposal to impose permissioned requirements on DeFi platforms leaked earlier this month, sparking backlash across the industry. Bo Hines, former director of President Trump’s Working Group on Digital Assets, criticized the Democrats’ stance, calling their response “satirical” and emblematic of a broader divide on digital asset policy. Meanwhile, the U.S. government shutdown, now in its fourth week and officially the second-longest in history, has effectively halted regulatory progress. Agencies such as the SEC and CFTC are operating with minimal staff, slowing reviews of crypto ETFs, exchange-traded products, and market oversight proposals. What’s Next for GENIUS Act and Stablecoin OversightAt the heart of U.S. crypto regulation news is the GENIUS Act, which aims to establish a clear regulatory framework for payment stablecoins. The law classifies stablecoins as neither securities nor national currency, allowing nonbank issuers and insured depository subsidiaries to operate under federal or state oversight.Under the act, regulators must draft rules within 18 months to define capital, liquidity, and risk management requirements for issuers. The Treasury, Federal Reserve, and FDIC will determine whether nonfinancial companies can issue stablecoins—a decision that could reshape financial stability and market concentration.Stablecoin activity has grown rapidly, with U.S. dollar-backed tokens now exceeding $260 billion in circulation and monthly transactions topping $1 trillion. While this demonstrates strong institutional interest, it also raises questions about systemic risk and buying/selling pressure during volatile market conditions. Government Shutdown Fallout: Weakened Investor Confidence, Retreat to Safe Haven AssetsThe shutdown’s ripple effects have extended into the crypto market, already reeling from an October 10 flash crash that erased billions in investor value. Bitcoin fell 14.6%, Ethereum 21%, and Dogecoin more than 50% in a matter of hours.With the SEC effectively shuttered, ETF approvals and enforcement actions are on hold—creating uncertainty for institutional investors and weakening market confidence. Congresswoman Maxine Waters warned that the ongoing lapse in oversight “leaves average American investors more vulnerable to another sudden crypto crash.”Prediction markets now forecast the shutdown could surpass 35 days, breaking the previous record. As long as agencies remain idle, crypto regulation in the U.S. will remain in limbo, and bullish momentum in digital assets could fade. Outlook: Waiting for ClarityExperts argue that the longer the shutdown continues, the greater the risk of regulatory paralysis. “Politically, time is running out for key bills,” said Cody Carbone, CEO of the Digital Chamber. Without legislative clarity, the U.S. risks falling behind global peers in shaping responsible blockchain policy.Still, industry leaders remain cautiously optimistic. Some, like Custodia Bank CEO Caitlin Long, report minimal disruption, suggesting selective progress in patent and compliance matters continues despite the broader freeze.Until the government reopens, however, the U.S. crypto regulation forecast remains uncertain—caught between political stalemate and an industry desperate for clear, enforceable rules to support innovation and institutional participation.