The change of the Speaker of the House of Representatives may affect the development of the encryption industry.

On October 3, 2023, the U.S. House of Representatives underwent a historic transformation. Current Speaker Kevin McCarthy was removed from office, marking the first time in American history that a sitting Speaker has been ousted through a vote. This event not only impacts U.S. politics but may also have far-reaching effects on the encryption industry.

With McCarthy's departure, pro-encryption Republican Patrick McHenry has become the most senior Republican in the House of Representatives. McHenry currently serves as the chairman of the Financial Services Committee and has always maintained a friendly attitude towards the encryption industry. He had threatened to issue a subpoena to SEC Chairman Gary Gensler regarding his interactions with the now-defunct cryptocurrency exchange FTX.

However, if McHenry is elected as the new Speaker, he will have to give up the position of Chairman of the Financial Services Committee. This could result in the committee losing a supporter of encryption, which in turn could affect the progress of related legislation. Regulatory affairs expert and former Citigroup executive Sean Tuffy stated: "This could potentially hinder the development of encryption legislation."

Another potential successor to McCarthy, Tom Emmer, is also an ally of the encryption industry. However, Emmer stated last week that he has no intention of competing for the speaker position.

In addition to the change of the Speaker, the potential risk of a government shutdown has also attracted the attention of the encryption market. Although the recent shutdown crisis has been temporarily alleviated, the government faces the possibility of a shutdown again after the temporary funding agreement expires on November 17.

David Dorn, the head of institutional research at a trading platform, pointed out in a recent report that a government shutdown could exacerbate market volatility in the short term. He stated: "The turbulence of traditional risk assets may spill over into the encryption space, but we believe this anxiety may be temporary. Digital assets like Bitcoin should recover quickly, as they tend to hedge well against the inherent fault lines of the traditional financial system."

Nevertheless, the Federal Reserve's policies remain a key factor influencing the encryption market. Doon stated that the Federal Reserve may continue to raise interest rates at the meeting on November 1, which would lay the foundation for a market rebound before the end of the year. Currently, the market anticipates that the probability of an interest rate hike on November 1 is about 20%.

McCarthy's ousting stemmed from his last-minute push to pass a bill that avoided a government shutdown, which angered some far-right members of the Republican Party. Republican Matt Gaetz introduced the motion to oust him, demanding that McCarthy disclose the details of the agreement reached with the Biden administration regarding funding for the war in Ukraine.

Overall, the change in the Speaker of the House of Representatives and the potential risk of a government shutdown may have significant effects on the encryption industry. Market participants need to closely monitor the political developments in Washington, as well as any related policies and regulations that may be introduced.