The US government shuts down much of its operations after two sides of congress failed to reach an agreement on the funding bill. Approximately 750,000 federal workers will reportedly be left unpaid. What was the cause?
Summary
- The U.S. government shut down on Oct. 1 after Democrats and Republicans failed to pass competing short-term funding bills.
- While the shutdown is not expected to directly harm crypto markets, it could delay key legislation like the Digital Asset Market Clarity Act.
On Oct. 1, the US government decided to cease federal operations after Democratic and Republican lawmakers failed to reach an agreement on a last-minute government spending bill. The bill required a total of 60 votes to pass senate vote, which could have prevented the government shutdown.
According to a report by NPR, Republicans vetoed a bill proposed by Democratic lawmakers designed to provide government funding throughout the end of October. The proposed bill included an extension of healthcare subsidies that would have expired at the end of the year.
Another bill was also blocked by the Democrats, who refused to approve the Republican’s bid on a short-term measure that would keep the government funded and running at current levels through Nov. 21, 2025. The bill was dubbed as a clean bill of funding without other initiatives attached, also known as a continuing resolution.
Both bills failed to pass the voting threshold of 60 votes. Therefore, the US government proceeded to enact a shutdown on federal operations for the unforeseeable future.
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Not long after the government shutdown started, both sides began blaming each other over the unintended outcome.
Vice President JD Vance blamed Democratic lawmakers for the shutdown, claiming that they are threatening the American people because the Republican side did not concede to their terms. He believes that the US government is headed for a shutdown because “the Democrats won’t do the right thing.”
On the other hand, Democratic Senate minority leader, Chuck Schumer echoed a similar sentiment; blaming the government shutdown on Republicans. He stated that Republicans are “plunging America into a shutdown, rejecting bipartisan talks, pushing a partisan bill and risking America’s health care.”
So far, both sides have yet to reach an agreement. However, Republican lawmakers stated that they plan to keep holding votes for the funding bill in hopes of wearing down the Democrats.
“Tonight, we had three [additional Democrat votes]. So the cracks are beginning to show,” said Republican Whip John Barraso.
How will the US government shutdown impact the crypto market?
Based on what was seen in the previous US government shutdown that ran through 2018-2019, the crypto market may not take a hard hit from the government shutdown.
At the moment, the crypto market has remained relatively stable amidst the government shutdown commencing. Bitcoin (BTC) has been bumped up by 0.5% to around $114,461, meanwhile Ethereum (ETH) has remained above $4,100 despite a slight 1.3% dip. The overall crypto market cap managed to rise by 0.1%, surpassing the $4 trillion mark.
Instead the government shutdown’s impact on the crypto market is predicted to be more indirect, specifically towards crypto bills that are due for approval.
Overall, the shutdown will impact the crypto space because it will serve to hinder data collection for investors. This is because the government stops publishing employment and inflation data during a shutdown, making it harder for traders to predict market movements.
Not only that, there is also a possibility that the much-anticipated CLARITY Act passage will be delayed because of the shutdown. The Digital Asset Market Clarity Act of 2025 is meant to establish a clear regulatory framework for digital assets by assigning oversight to the SEC and CFTC, further formalizing the crypto market.
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