Oversight stalls, IPOs face delays, and crypto ETFs get caught in the crossfire as the US financial regulators began shutting down on Wednesday. Congress failed to extend federal funding, forcing critical agencies to furlough thousands of employees and halting key functions that keep Wall Street and crypto markets running smoothly.
Markets face oversight gaps
The Securities and Exchange Commission (SEC) has furloughed over 90% of its staff, retaining just under 400 employees to handle emergency cases and essential surveillance. The Commodity Futures Trading Commission (CFTC) is even thinner, operating with only about 5.7% of its workforce, leaving large sections of the derivatives market without normal oversight.
While government shutdowns are not new, experts warn that this one could hit harder if prolonged. Missing economic reports, delayed market data, and frozen IPO approvals could all add uncertainty, rattling both traditional investors and the fast-moving crypto sector. Early signs showed the dollar weakening, Wall Street futures dipping, and gold climbing to a record high as traders sought safer ground.
IPOs and ETFs stalled amid US financial regulators’ chaos
Routine corporate filings will still be accepted, but the SEC has suspended its ability to process new listings. This puts the brakes on the recent IPO revival, just as several major companies were preparing to go public.
“The shutdown gives investors a reason to hesitate at a time of political uncertainty,” said Samuel Kerr, head of equity capital markets at Mergermarket. “It damages sentiment now and clogs the IPO pipeline for the future.”
Crypto investors face their own setback. The SEC’s Division of Trading and Markets will not be able to review pending exchange-traded fund applications. That includes high-profile ETFs tied to Solana and XRP, which analysts had expected to launch in early October. These delays could slow momentum in the broader digital asset market, where investor confidence is closely linked to regulatory approvals.
Political and regulatory reactions
Congresswoman Maxine Waters, ranking Democrat on the House Financial Services Committee, warned that the absence of oversight from US financial regulators exposes markets to unnecessary risk. “At a time when strong oversight is needed most, the shutdown leaves both investors and the financial system vulnerable,” she said in a statement.
Other banking agencies like the Federal Reserve and the Federal Deposit Insurance Corporation remain open, since they are funded outside the congressional budget process. They reassured lenders that routine activities such as loan approvals would continue. However, the National Flood Insurance Program has been largely shuttered, adding another layer of disruption for certain lending markets.
A cloud of uncertainty
Markets have historically brushed off short shutdowns, but a longer one could magnify the damage. The combination of missing economic signals, delayed IPO activity, and stalled crypto ETF launches creates uncertainty at a delicate time for global finance.
The broader message is clear: until funding is restored, US financial regulators are unable to fully perform their duties, leaving Wall Street, digital asset markets, and everyday investors navigating without their usual safety net.
