SEC budget lapse freezes new crypto ETF review process at start of U.S. fiscal year

The U.S. federal fiscal year began on Oct. 1, 2026 without an approved budget, pushing the Securities and Exchange Commission into a funding lapse and effectively pausing its work on new cryptocurrency ETF filings, according to HOGE Wire as cited by ChainCatcher. During the lapse, the SEC is not declaring registration statements effective and has stopped issuing comment letters. Trading in existing spot crypto ETFs is not affected: BlackRock's IBIT, Fidelity's FBTC and Grayscale-related products remain available, with creations and redemptions continuing as usual. Crypto ETF launches typically require two parallel approvals: an exchange-filed Form 19b-4 and an issuer-filed registration statement (Form S-1 or N-1A). The report says both tracks are effectively on hold while the agency lacks funding. The pause comes despite a recent streamlining effort. On Sept. 17, 2025, the SEC approved a generic listing standard for commodity trust shares that lets qualifying products avoid separate 19b-4 filings, cutting the review window from as long as about 240 days to roughly 75 days. The template does not apply to leveraged, inverse, actively managed, loaned or staked products. As October opened, more than 90 applications were still pending, with some deadlines falling early in the month. Nate Geraci told Decrypt that the industry's "ETF Cryptober" narrative may be temporarily sidelined, emphasizing the development is a delay rather than a rejection. The report also notes that on March 17, 2026, the SEC and the U.S. Commodity Futures Trading Commission jointly clarified that protocol staking does not amount to a securities offering or sale. Separately, BlackRock's Ethereum product ETHB is listed on Nasdaq with a 0.25% fee, and it distributes 82% of staking rewards to investors.