The longest US government shutdown in history has claimed its latest victim: the Chicago Board Options Exchange (Cboe) has officially withdrawn its highly anticipated Bitcoin ETF proposal. The move, confirmed on January 25, 2019, underscores how political dysfunction in Washington can send ripples — or in this case, halt them entirely — through the cryptocurrency market.
TL;DR
- Cboe withdrew its Bitcoin ETF proposal due to the 35-day US government shutdown
- SEC staff furloughs prevented any meaningful progress on ETF discussions
- Cboe plans to resubmit the filing at a later date
- Bitcoin traded at $3,599.77, down 1.86% for the week
- Total crypto market cap hovered just below $120 billion
The Shutdown That Stalled Wall Street
The US government shutdown, which began on December 22, 2018, and stretched into late January 2019, became the longest in American history at 35 days. With hundreds of thousands of federal workers furloughed, the Securities and Exchange Commission (SEC) was operating with a skeleton crew. For Cboe, which had been in ongoing discussions with the SEC about its VanEck/SolidX Bitcoin ETF proposal, the timing could not have been worse.
With the application decision deadline of February 27 fast approaching and no real progress being made due to staff furloughs, Cboe made the pragmatic decision to pull the proposal rather than risk a rushed rejection or, worse, no decision at all. A Cboe representative stated that the exchange plans to resubmit a filing at a later date and looks forward to continued discussions with the SEC.
Market Reaction: Cautious Optimism Meets Bearish Reality
The cryptocurrency market barely flinched at the news. Bitcoin closed the week at $3,599.77, a modest 1.86% decline that reflected the broader malaise gripping digital assets in early 2019. The total cryptocurrency market capitalization sat just shy of $120 billion, having shed approximately 1.6% over the previous seven days.
The week had actually started on a positive note, with the market cap jumping over $3 billion in less than an hour on Saturday. But the rally was short-lived — the very next day, the market surrendered nearly $5 billion in roughly the same timeframe, a 3.8% swing that epitomized the volatility of the post-ICO crash era.
Davos Elite Weigh In on Bitcoin’s Future
Meanwhile, at the World Economic Forum in Davos, Switzerland, CNBC assembled a panel of heavyweights from both the crypto and traditional finance worlds. The takes were mixed, to say the least.
Jeff Schumacher, founder of BCG Digital Ventures, delivered perhaps the most provocative soundbite of the week: “I do believe [bitcoin] will go to zero. I think it’s a great technology but I don’t believe it’s a currency. It’s not based on anything.”
Not everyone shared that pessimism. Glen Hutchins, chairman of North Island, offered a more nuanced framework: “The way to think about the value of the tokens is as a derivative of the use value of the protocols they enable.”
Brad Garlinghouse, CEO of Ripple, kept the focus on fundamentals, arguing that “the long-term value of any digital asset is derived from the utility it delivers.” Edith Yeung, a partner at 500 Startups, struck an optimistic tone about the bear market’s cleansing effect: “The people who are here now building are the ones that really believe in the technology.”
Pennsylvania Offers a Regulatory Silver Lining
While the federal government remained paralyzed, states were making their own moves. The Pennsylvania Department of Banking and Securities (DoBS) issued guidance that cryptocurrency exchanges and Bitcoin ATMs do not need Money Transmitter Licenses (MTLs) to operate in the state.
The DoBS reasoning was straightforward: under Pennsylvania law, “only fiat currency, or currency issued by the United States government, is ‘money’ in Pennsylvania.” Since cryptocurrency entities exchange fiat for crypto directly — rather than transmitting fiat to a third party on behalf of a customer — they fall outside the MTL requirement.
While crypto businesses still need to comply with federal regulations and other states’ rules, Pennsylvania’s classification marked a meaningful step toward regulatory clarity. In an environment where the SEC couldn’t even process ETF applications, state-level pragmatism offered a glimmer of hope.
Why This Matters
The Cboe ETF withdrawal was more than just a procedural hiccup — it was a stark reminder of how dependent the cryptocurrency industry’s institutional aspirations remain on traditional gatekeepers. The SEC couldn’t review the proposal because the government was shut down. You can’t decentralize your way out of a federal furlough.
Yet the market’s muted reaction told its own story. Bitcoin at $3,599 was already down over 80% from its all-time high, and traders had priced in regulatory dysfunction long before the shutdown made it official. The real story was happening in state capitals like Harrisburg, where regulators were quietly building frameworks that would eventually support the very institutional products that Washington couldn’t approve.
Disclaimer: This article was originally published on January 25, 2019, and reflects the market conditions and news events of that date. Cryptocurrency prices and market data cited herein are historical. This content is for informational purposes only and does not constitute financial advice.
btc barely dipped 1.86% on this news. market already priced it in, the shutdown narrative was old by jan 25
remember when everyone said the etf was gonna be the catalyst for the next bull run? 2019 was humbling lol
35 days of shutdown and the one thing that suffers is crypto regulation. of course. the sec cant even review paperwork when congress cant pass a budget
Cboe pulling the VanEck SolidX filing was probably the right call. Better to wait for a functioning SEC than get a rushed rejection that sets precedent.
120 billion total market cap. we were so small back then. hard to believe given where we are now