Journalist
Hassan Shittu
Journalist
Hassan Shittu
Share
The United States government shutdown has entered its 38th day, marking the longest in history, as the Senate prepares for a critical vote on a new funding bill that could determine when Washington reopens.
The political deadlock has halted progress on key legislative priorities, including the long-anticipated crypto market structure bill known as the CLARITY Act.
Prolonged Shutdown Risks 2% GDP Hit as Senate Prepares Crucial Vote
The Senate is expected to vote this week on a Republican-backed proposal that would end the shutdown and fund several federal agencies through the rest of the fiscal year.
The measure requires 60 votes to advance, and while Republican leaders have expressed cautious optimism, uncertainty remains over whether enough Democrats will support it.
“My hopes and expectations are always that we’re going to have enough Democrats to actually proceed, but I don’t know, we’ll see,” Senate Majority Leader John Thune told reporters.
The standoff, which began on October 1 after lawmakers failed to agree on a budget, stems from disagreements over healthcare subsidies tied to the Affordable Care Act.
Democrats have demanded an extension of expiring tax credits that help about 24 million Americans afford insurance, while Republicans argue that those issues should be negotiated separately once the government reopens.
With roughly 1.4 million federal workers affected, including 700,000 furloughed since early October, the shutdown’s economic and social toll is deepening. Federal workers have now missed multiple paychecks, and agencies from the Federal Aviation Administration (FAA) to the USDA are cutting services.
A Rhode Island court on Thursday ordered the Trump administration to restore full funding for the SNAP program after it had been reduced to partial payments.
The administration has appealed the decision, arguing that funding decisions should await congressional action. Nearly 42 million Americans depend on the program, which costs more than $8 billion per month.
Economists warn the prolonged shutdown could inflict lasting damage on the U.S. economy.
The Congressional Budget Office estimates the standoff could shave up to two percentage points off fourth-quarter GDP growth, draining between $10 billion and $30 billion weekly.
Small businesses that rely on federal contracts and loans are running short on capital, and consumer spending is declining as millions of workers remain unpaid.
How Long Can Crypto Wait While Washington Sleeps?
The shutdown has also paralyzed Washington’s regulatory machinery. Agencies overseeing financial markets, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), are operating with skeleton crews.
Reviews of pending applications, including multiple proposals for crypto exchange-traded funds (ETFs), have been suspended.
The impasse has effectively frozen legislative momentum on digital assets. The bipartisan CLARITY Act, designed to define how cryptocurrencies and stablecoins are regulated across federal agencies, had seen renewed activity in late October.
Senators John Boozman and Cory Booker said their committees were working “daily” to finalize their section of the bill and expected a vote before Thanksgiving. However, with the government shutdown entering its sixth week, that timeline is now in jeopardy.
Coinbase CEO Brian Armstrong told CNBC that roughly 90% of the bill’s issues had already been resolved and that Thanksgiving had been floated as a possible target for completion.
The market fallout has extended beyond Capitol Hill. The liquidity squeeze triggered by the shutdown, exacerbated by the U.S. Treasury General Account hoarding funds while agencies remain closed, has weighed heavily on risk assets.
Bitcoin has retreated from recent highs, testing long-term support levels as investors navigate reduced market liquidity and uncertainty around fiscal policy.
Meanwhile, prediction markets indicate growing skepticism about a quick resolution to the shutdown.
Data from the decentralized platform Polymarket shows traders assigning a 59% probability that the shutdown will extend beyond November 16, with only a 13% chance of reopening before mid-month.
Credit: Source link
