What happened? The U.S. government shutdown has reached 38 days as the Senate prepares a critical vote on a funding bill.
The shutdown began after lawmakers failed to agree on a budget and has frozen many federal functions and stalled legislation. The Senate is set to vote on a Republican-backed measure that needs 60 votes to move forward, but it’s unclear if enough Democrats will support it. Agencies are operating with skeleton crews, which has paused regulatory reviews and delayed key bills like the CLARITY Act for crypto.
Who does this affect? Millions of federal workers, program beneficiaries, small businesses, and investors are being hit by the impasse.
About 1.4 million federal employees are affected, with roughly 700,000 furloughed and many missing paychecks, while services from the FAA to USDA are cut back. Nearly 42 million people rely on SNAP, which saw reduced payments before a court ordered full funding restored, and small businesses depending on federal contracts or loans face cash shortfalls. Market participants also feel it — regulators at the SEC and CFTC are largely sidelined, pausing reviews of ETF and crypto filings that investors and firms are waiting on.
Why does this matter? The shutdown can dent GDP and ripple through markets, creating liquidity strains and regulatory delays.
Analysts warn the standoff could shave up to two percentage points off fourth-quarter GDP and cost between $10 billion and $30 billion a week, weakening consumer spending and small business activity. The Treasury’s hoarding of cash and reduced regulatory capacity have tightened liquidity for risk assets, pushing Bitcoin lower from recent highs and increasing market volatility. If it drags on, ETF approvals, crypto market-structure reforms, and broader market confidence could be delayed, raising the chance of lasting economic and financial damage.