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government shutdown in history has claimed its latest victim: the Chicago Board Options Exchange (Cboe) has officially withdrawn its highly anticipated Bitcoin ETF proposal.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.
A 35-day government shutdown killing a Bitcoin ETF proposal. If you needed proof that regulation moves at its own pace, this was it.
BTC at $3,599 and the SEC could not even answer emails. crypto waits for no one
the irony is the shutdown was over border wall funding. a completely unrelated political fight killed crypto regulation progress for months
border wall funding killed crypto regulation progress and nobody batted an eye. peak 2019 political dysfunction
crypto literally thrived while the SEC was offline. says everything about whether we need them
nosrl_ crypto thriving while the SEC was furloughed is the most poetic thing. regulation slows innovation more than it protects
Market cap at $120 billion. Compare that to today. The Cboe withdrawal was a speed bump, not a roadblock.
Julian W. $120B total market cap feels like another universe. the Cboe withdrawal was front page news in crypto circles and barely a footnote in finance media
government shutdown killing an etf filing proved regulation moves on its own slow schedule
Cboe pulling the plug but promising to resubmit. that persistence is why we eventually got spot ETFs. credit where its due
took 5 more years after this to get spot ETFs. cboe was way ahead of the market
cboe pulled it but said they would resubmit. that kept the pressure on until spot etfs finally arrived
Emeka N. cboe resubmitting after the shutdown was the real story. that persistence over 5 years is why spot ETFs exist at all
35 days of government shutdown and the SEC couldnt process one ETF filing. imagine relying on the government to approve your financial products
sec_clock_ 90% of SEC staff furloughed is wild. Cboe didn’t pull the filing because they wanted to, they pulled it because there was literally nobody to talk to
btc at 3599 during the shutdown and nobody panicked about the price. everyone knew the ETF was coming back eventually
BTC at $3,599 with a $120B total market cap. cboe pulling the ETF feels minor now but back then it was a gut punch to institutional hopes
BTC at $3,599 and the SEC literally couldnt pick up the phone. 2019 was a different universe
35 day shutdown meant sec could not even answer the phone on the vaneck solidx etf. btc sat at 3599 doing nothing
sec_clock_ exactly. the furloughs affected like 90 percent of SEC staff. even if cboe pushed harder there was literally nobody to read the filing
Tobias H. 5 years of persistence from cboe and the ETF finally landed. people forget how many filings got pulled before the spot ETFs actually stuck
35 days of government closed and the SEC couldnt process a single ETF filing. imagine relying on these people for market integrity
ShutdownPaleo the irony is cboe pulled it voluntarily. they could have waited but the uncertainty was worse than starting over
BTC at 3599 and people thought the ETF would save them. turned out the ETF was 5 more years of paperwork away
etf_delay_watcher BTC at 3599 and the ETF was still 5 years away. anyone who held from the shutdown to the spot ETF launch is up roughly 2000 percent. patience paid