The U.S. government shutdown affects the encryption industry, and Canaan’s IPO in the U.S. will also be yellow?

Translator | Moni

Translator | Moni

Original link: https://www.coindesk.com/how-the-us-government-shutdown-is-halting-crypto-progress-on-wall-street

The United States is experiencing the longest "government shutdown" so far, and it seems to have had a big impact on the cryptocurrency industry.

Due to the disagreement between Congress and the White House on the appropriation of Donald Trump's border wall plan, the US government officially closed at 00:01 on December 22, 2018 local time (13:00 on the 22nd Beijing time). At first, Trump promised to make Mexicans pay for the cost of building a border wall, but now he is asking American taxpayers to pay for it and insisting that Congress pass a "US-Mexico wall construction budget" of up to $5 billion. In this regard, the Democrats and some Republicans are opposed to it, believing that building a wall at a cost is not enough to stop the influx of illegal immigrants. In addition, the two parties in the United States also had disputes over several other federal budgets, which led to the difficulty of delivering the federal budget. If the budget is not passed, the government will close some institutions, temporarily stop providing "non-essential services", and relevant government employees will also stop paying salaries to reduce expenses.

The gridlock in Washington has dragged on for four weeks so far, the longest government shutdown in U.S. history. In various government departments, the two major regulatory agencies closely related to the cryptocurrency industry-the United States Securities and Exchange Commission (SEC) and the United States Commodity Futures Trading Commission (CFTC) have also stalled. Currently, if you want to launch cryptocurrency-related products and services in the US market in compliance, you must obtain approval from these two regulatory agencies.

Now it seems that the most "unlucky" may be the Bitcoin futures trading platform Bakkt. This encryption company created by Intercontinental Exchange (the parent company of the New York Stock Exchange) has to postpone the business. One of the important reasons is that Regulatory approval could not be obtained before Dec. 22, 2018, the first day of the U.S. government shutdown. It is reported that Bakkt's business application is still in the state of "processing" unless the regulator opens a 30-day public comment period, which has also been put on hold due to the government shutdown. Previously, Bakkt claimed that if all goes well, the business will be launched on January 24, but they have not yet announced the specific time for the business to go online.

However, the U.S. government shutdown did not stop Bakkt from building a trading platform. They recently announced the acquisition of a partial stake in the independent futures exchange Rosenthal Collins Group (RCG) to strengthen their own regulatory compliance. Bakkt CEO Kelly Loeffler wrote in a media release on New Year’s Eve:

"We made great progress in December last year and we owe it to the windfall to continue to support our customers as long as the regulator gives the 'green light'."

Other startups appear to be in a similar situation — such as ErisX, a cryptocurrency trading platform that just raised $27.5 million to provide clients with a regulated futures trading platform and clearing services, so access to U.S. commodity futures trading is mandatory. Commission approval, now they have to wait for federal employees to return to work. ErisX CEO Thomas Chippas said:

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What is the impact of the Bitcoin exchange-traded fund people are most concerned about?

In addition to the anxiously awaited cryptocurrency exchanges, some specific cryptocurrency products may also be affected by the US government shutdown.

As the industry's most closely watched bitcoin exchange-traded fund (Bitcoin ETF), the US Securities and Exchange Commission has received proposals for rule changes from VanEck, SolidX and the Chicago Board Options Exchange (Cboe). In fact, the final review time of these proposals has been postponed many times. According to the latest disclosure of the US Securities and Exchange Commission, the approval deadline is February 27, 2019. It should be noted here that, according to the US Code (US Code) Rule 15 states that any proposed rule change will be deemed to have been approved if the SEC has not issued an order of approval, or disapproval, of the rule change. That is, under the current law, if the SEC does not adopt any new proposals by the deadline, these proposals will be "approved by default."

However, some legal experts say that even if the U.S. government shuts down, such a "default approval" is unlikely to happen. Ethan Silver is the president of the brokerage business of Lowenstein Sandler, a well-known law firm. He expects that during the government shutdown, the SEC will have on-duty staff to continue working. Ethan Silver added:

“I think if the SEC staff had to make a decision, they would probably just say no, rather than get technical approval for a Bitcoin ETF. Not only that, but the SEC is very The application may be rejected on the grounds of market integrity, emergency environment, etc.”

Jake Chervinsky, an attorney at the Kobre & Kim law firm, said on Twitter that the SEC is likely to find some reason to reject all applications for bitcoin exchange-traded funds during the government shutdown, as did David Silver, an attorney at the Silver Miller law firm. Agree with this point of view.

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Will Canaan’s IPO in the United States be yellow?

While the U.S. cryptocurrency market is relatively mature, the industry as a whole is still awaiting clearer official guidance on how to safely handle digital assets.

Vince Molinari, co-founder of cryptocurrency exchange Templum, said regulatory guidance previously planned by the SEC may also be delayed. Vince Molinari says:

“I think the entire encryption industry is affected by the US government shutdown. It may take one to two quarters, or even longer, for the industry to get back on track, depending on when the government shutdown ends. Even if the shutdown is over, Government workers also need to address work missed while on furlough first."

During the U.S. government shutdown, all companies' plans for initial public offerings (IPOs) are delayed.

Previously, it was reported that Canaan, a cryptocurrency mining equipment manufacturer, was considering an initial public offering in the United States. Although the company revealed that the plan is still in its early stages, Vince Molinari believes that the US government shutdown may All IPO approvals are postponed "indefinitely".

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At this stage, can the encryption industry only rely on the US Congress to get back on track?

With all work on the U.S. financial regulators at a standstill, companies in the crypto industry are now pinning their hopes on the U.S. Congress, as lawmakers in the House and Senate are still at work.

Kristin Smith, head of external affairs at the Blockchain Association, said:

“Over the past few months, we have been communicating with congressional lawmakers and regulators about leveraging the token economy to our advantage, and we’ve made some progress. But now, the U.S. government shutdown has stalled all conversations. Shutdown There is a lot of work ahead of us that needs further discussion, such as cryptocurrency taxation, regulatory guidance from the SEC, and regulatory guidance from the US Treasury Department. For now, at least for the foreseeable future, these issues will be considered Postpone."

At present, the official spokesperson of the SEC seems to have set up an automatic reply to its email, which wrote:

"The SEC is currently closed due to the federal government's non-approval of funds as scheduled. We are currently out of the office. Returning to work will occur once funding is approved. Emails will not be viewed or responded to while the agency is closed. Thanks."