As the US government shutdown enters its second month, the Securities and Exchange Commission is using limited staff to process initial public offerings and approve cryptocurrency exchange-traded funds. Chairman Paul Atkins explained measures to keep markets functioning despite furloughs reducing the workforce to under 400 employees. Work on expanding alternative assets in 401(k) plans has stalled amid the disruptions.
The US federal government shutdown, now in its second month, has slashed the Securities and Exchange Commission's workforce to fewer than 400 employees, down from more than 4,200. SEC Chairman Paul Atkins, speaking on Fox Business, highlighted the agency's triage efforts to maintain key market functions. "We cannot process these IPOs under the rules as they are…with this government shutdown," Atkins said on Monday.
To address this, the SEC revived a provision from the Securities Act of 1933, allowing companies to go public 20 days after filing a registration statement if they remove a delaying amendment. This applies only to firms in the final review stages before the shutdown. Atkins noted that about 20 companies had undergone multiple comment rounds. Two such firms, Maplight and Navon, have already launched their initial public offerings using this process, with more potentially following.
The shutdown's effects extend to regulatory initiatives. Efforts to expand access to private credit, digital assets, and other alternatives in 401(k) plans have halted. The SEC, in partnership with the Labor Department, was developing guidance and rule changes to include these assets in defined-contribution plans while adding guardrails. "The SEC would be working on those changes, and plot a course to open up the defined-contribution plans to alternative assets while also putting ‘guardrails’ in place," Atkins said in a CNBC interview last week. The $12.5 trillion 401(k) market could see private equity managers' fees triple over the next decade, per Bloomberg Intelligence estimates. However, Democratic Senators Elizabeth Warren and Bernie Sanders have criticized the potential benefits for retirement savers.
Despite the constraints, new cryptocurrency exchange-traded funds have debuted, including those focused on Solana, Litecoin, and Hedera’s HBAR. The SEC's guidance permits some filings to become effective automatically after 20 days. Hunter Horsley, chief executive of Bitwise Asset Management, commented on the launch of the Bitwise Solana Staking ETF: "SEC Chair Paul Atkins and the crypto task force have been very clear with their intentions of opening up the asset class," he told Bloomberg News.