SEC and CFTC Employees Return to Work After Government Shutdown

SEC and CFTC Employees Return to Work After Government Shutdown

Employees who were furloughed during the recent US government shutdown are expected to return to their posts at the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) after a 43-day hiatus.

Operational plans released by both the SEC and CFTC indicate that staff are scheduled to return on Thursday, following President Donald Trump's signing of a funding bill late Wednesday to restore federal operations. These plans stipulate employee return on the "next regularly scheduled workday [...] following enactment of appropriations legislation," a point affirmed by acting CFTC chair Caroline Pham via an X post on Thursday.

The government shutdown significantly impacted both agencies, resulting in reduced staff and curtailed operations. For the SEC, this meant a diminished capacity to review applications for exchange-traded funds (ETFs), particularly those linked to cryptocurrencies. The CFTC's contingency plan outlined a near-total cessation of activities, encompassing enforcement, market oversight, and regulatory rulemaking.

The reopening of the government, however, presents a new set of challenges. Both the SEC and CFTC face a backlog of work, including the review of registration applications submitted during the 43-day shutdown period. Some companies strategically submitted IPO and ETF applications, anticipating the imminent end of the shutdown.

Jay Dubow, a partner at Troutman Pepper Locke, noted to Cointelegraph, "I’m sure some [companies] took the position that they could just submit [an application to the SEC] knowing it’s not going to be looked at until they get back, but at least they’re in the queue." He also cautioned against the recurring nature of these shutdowns, stating, "Every time you go through something like this, there’s the risk of things just slipping through the cracks in various ways."

Despite operational constraints, officials from both regulatory bodies remained active at industry conferences, offering insights into their approach to cryptocurrencies and acknowledging the limitations imposed by the shutdown. SEC Chair Paul Atkins commented on October 7, less than a week into the funding lapse: "Within limits, we’re still obviously functioning. There are restrictions on what we can and can’t do, especially for staff [...] I can still come and do things like this [referring to the conference]."

Prior to the funding resolution, Atkins indicated the SEC's intention to explore "establishing a token taxonomy" in the coming months, basing it on the Howey test to recognize the potential for "investment contracts to come to an end." Pham similarly highlighted the CFTC's advocacy for the approval of leveraged spot cryptocurrency trading as early as December.

Potential CFTC Chair Awaits Senate Hearing

Michael Selig, currently serving as chief counsel for the SEC’s crypto task force, is scheduled to appear before the Senate Agriculture Committee on Wednesday as part of the administration's effort to confirm him as the next CFTC chair. While the hearing could have proceeded during the shutdown, Selig's authority within the agency would have been severely restricted had he been confirmed.

Pham is expected to relinquish her role as acting chair upon Selig's confirmation. However, even with a swift installation, the CFTC will still grapple with a leadership void, operating with only one Senate-confirmed commissioner out of the usual five.