Furloughed Regulators Halt Crypto Bill Progress, Delaying U.S. Digital Asset Leadership

The U.S. Senate's efforts to pass a landmark crypto market structure bill face significant delays amid the [36-day-old government shutdown], which has furloughed critical staff at regulatory agencies like the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). Lawmakers are now prioritizing a funding bill to reopen the government before advancing crypto-specific reforms, pushing the legislation's timeline into early 2025, according to Senator Cynthia Lummis, a key sponsor, as reported by Blockonomi.

Bipartisan discussions on the bill, led by Senators John Boozman (R-Ark.) and Cory Booker (D-N.J.), remain active despite the shutdown. The draft aims to establish clear regulatory boundaries for digital assets, addressing oversight gaps and fostering innovation in decentralized finance (DeFi). White House crypto and AI adviser David Sacks recently expressed optimism after meetings with Boozman and Booker, calling the negotiations "encouraging" and anticipating a bipartisan draft "soon".

However, disagreements persist over DeFi provisions, with Democrats advocating for stronger consumer protections and Republicans cautioning against stifling innovation.

The shutdown has compounded challenges by limiting technical expertise needed for the bill's development. Patrick Witt, executive director of President Donald Trump's Council of Advisors for Digital Assets, noted that while the pause has created logistical hurdles, it has also allowed for more direct engagement among stakeholders. Lummis, however, acknowledged the difficulty of securing agency input without fully operational regulators, stating, "We're making tremendous progress, but the lack of full agency capacity is a hurdle".

With the Senate set to recess next week, the likelihood of a Thanksgiving markup has diminished, shifting expectations to December. The Agriculture Committee's draft, still in flux, will likely include bracketed sections indicating unresolved policy language, particularly around agency jurisdiction and enforcement mechanisms, according to a Senate draft report. Banking Committee Chair Lummis emphasized that staff-level negotiations continue daily, though she admitted passing the bill before year-end is improbable.

The delay underscores the complex interplay between legislative priorities and the political calendar. North Carolina Senator Thom Tillis (R) warned that lawmakers have until January or February 2025 to finalize the bill before mid-term election dynamics complicate further progress. Meanwhile, Democrats have prioritized healthcare subsidies and budget negotiations, potentially slowing crypto-related measures.

Despite the uncertainty, momentum remains for the bill, which is seen as a cornerstone for the U.S. crypto industry. If passed, it would clarify regulatory roles for the SEC and CFTC, establish guardrails for DeFi, and position the U.S. as a leader in digital asset innovation. As Sacks noted, "The goal is to get this right—balancing oversight with the need to foster growth".