US Shutdown Threatens XRP ETF Approvals & Price Momentum

The probability of a US government shutdown has climbed to levels not seen in years, with prediction market Kalshi pricing a 73% chance that lawmakers fail to pass a funding bill before the October 1 fiscal deadline. This sharp increase reflects weeks of gridlock in Congress and former President Donald Trump’s decision to cancel budget negotiations with Democratic leaders, which narrowed the path toward compromise. Federal agencies will lose authority to spend if lawmakers fail to reach an agreement by midnight on September 30.

The political standoff has triggered familiar partisan rhetoric, with former President Barack Obama arguing that “Republicans would rather shut down the government than help millions of Americans afford health care.” The White House countered that Democrats are pushing the nation “to the brink” by jeopardizing funds for veterans, seniors, and law enforcement. This echoes the 34-day standoff during Trump’s first term, which furloughed hundreds of thousands of workers and disrupted government operations nationwide.

The consequences of a shutdown would extend beyond Washington, particularly for the cryptocurrency sector where XRP, the third-largest crypto asset by market capitalization, sits at the center of several initiatives tied to government agencies. A shutdown would reduce staffing at key regulators including the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), slowing or halting reviews of digital asset filings.

This regulatory slowdown comes at a critical juncture for XRP, with multiple applications for spot crypto exchange-traded funds (ETFs) facing October deadlines. Six firms, including Grayscale and 21Shares, have filed for spot XRP ETFs. ETF analyst Nate Geraci described the coming quarter as “enormous” for review calendars, with decisions expected across a range of tokens. Any disruption in the regulatory workflow could delay these crucial approvals indefinitely.

The timing is particularly significant because spot ETFs lower barriers for institutions and retail investors by offering regulated exposure to digital assets. Delays in approval could weaken the momentum analysts expect to drive new inflows into XRP, potentially stalling the token’s institutional adoption trajectory during what many consider a breakout year for the digital asset.

Beyond ETF approvals, Ripple faces a second vulnerability from the potential government shutdown. The company’s bid for a US national bank charter, which Ripple has promoted as crucial for building dollar-linked payment rails, depends on reviews by the Office of the Comptroller of the Currency (OCC). A prolonged shutdown would pause these assessments, postponing a milestone in Ripple’s US strategy.

The national bank charter represents a strategic priority for Ripple’s expansion of its US payment infrastructure. Without this regulatory approval, the company’s ability to establish comprehensive dollar-denominated payment systems could face significant setbacks. The OCC’s review process, already complex and time-consuming, would be further delayed by staffing reductions during a shutdown, creating additional uncertainty for Ripple’s business development timeline.

The regulatory uncertainty surrounding a potential government shutdown could spill into the spot market value of XRP. Despite steady institutional interest, the token has traded in a narrow range under $3 over the past month, reflecting market caution amid the political standoff in Washington.

However, technical analyst Ali Martinez noted that whales purchased 120 million XRP in the last 72 hours, signaling renewed confidence among large investors. This substantial accumulation sets the stage for a decisive period in which XRP could hold its ground and potentially build market momentum despite the regulatory headwinds.

The conflicting signals—between institutional accumulation and regulatory uncertainty—create a precarious situation for XRP’s market position. While whale activity suggests underlying confidence in the asset’s fundamentals, the impending government shutdown threatens to reverse investor interest in risk-on digital assets like XRP, potentially stalling what analysts had anticipated would be a $173 billion market recovery during a crucial breakout period for the cryptocurrency.