Last October, the US government shutdown lasted for 43 days, causing a global financial liquidity crunch and a sharp drop in the crypto.

Many people still vividly remember that incident. And at the end of this month, something similar may happen again.

Three days ago, Trump said in an interview in Davos, "I think we're in trouble again, and it's very likely that we'll be in another government shutdown caused by the Democrats." Although lawmakers are working hard to finalize a funding agreement, with the January 30 deadline fast approaching, the U.S. government has only four working days left, and another shutdown seems difficult to avoid.

The current major disagreements between the two parties focus on funding for ICE and Obamacare. These are also long-standing campaign issues: immigration policy and social welfare. To further understand why a government shutdown might occur, we must begin with one of the largest welfare fraud cases in U.S. history, which took place in Minnesota.

It all started in Minnesota.

The story begins in 2020, right after the outbreak of the pandemic. The United States has a traditional welfare policy: providing free lunches to children from impoverished families. Before the pandemic, this benefit was strictly regulated; children had to eat together at schools or formal community centers, and roll call was required to prevent fraudulent claims. But with the pandemic, schools closed, and children stayed home. So, the US Congress made a bold move, changing the policy to allow takeout meals without strict verification. As long as you were a registered non-profit organization, the government would provide funding based on the number of meals you distributed, with no upper limit.

This vulnerability is the backdrop to the Minnesota welfare fraud case, and it was exposed by Nick Shirley, an American social media blogger.

In December 2025, Nick Shirley released a 42-minute investigative video that went viral overnight. In the video, he exposed a group of non-profit organizations that used the guise of "child nutrition" and "assistance to vulnerable groups." These organizations applied for funding from state and federal governments, claiming to serve tens of thousands of people, but in reality, many of the children did not exist, and the children's meals did not exist either. The so-called public welfare projects were just a shell used to obtain government funding.

The video spread rapidly after its release, garnering tens of millions of views within the first 24 hours. With various short video edits and reposts, the overall reach exceeded 100 million. Following investigations by the Department of Homeland Security (DHS) and the Federal Bureau of Investigation (FBI), it was discovered that since 2018, the federal government had allocated a total of $18 billion to 14 public programs in Minnesota, with $9 billion of that amount involved in the fraud. This is one of the largest welfare fraud cases in U.S. history.

What makes this case truly politically explosive is that it took place in Minnesota.

Minnesota has long been a stronghold for the Democratic Party, and its Democratic governor was Harris's running mate. It's also a state heavily reliant on welfare programs and with an exceptionally high concentration of non-profit organizations. Over the past decade, its welfare system has developed into a structure of "outsourced governance": the government doesn't directly provide services but instead delegates many public functions to non-profit organizations. Theoretically, this is for efficiency and community autonomy; however, in reality, it has created an extremely lax, poorly regulated, and politically complex gray area.

Many of the organizations involved had close ties to the local Democratic Party's political landscape. Evidence suggests that a significant portion of the funds obtained by these welfare fraud organizations flowed into Democratic Party campaign donations.

Meanwhile, Minnesota is itself a highly immigrant state, with a large Somali and other immigrant population. The Minnesota Attorney General's Office stated that 82 of the 92 defendants in this case are Somali Americans. This creates a complex web of issues involving immigration enforcement, welfare distribution, and public safety, precisely touching upon core issues of long-standing conflict between the Democratic and Republican parties, and key policy promises repeatedly emphasized by Trump and the Republican Party during their campaigns.

Since someone handed them a knife, the Republicans naturally chose to plunge it in hard.

Both Trump and Musk, the biggest "internet celebrities" in the current US administration, have frequently retweeted related content, fiercely criticizing Minnesota's handling of the situation and linking such opaque and potentially abused subsidy policies to the Democratic Party's long-standing expansion of social welfare.

Following the exposure of the Minnesota welfare fraud case, Trump significantly intensified immigration enforcement in Minnesota. The Department of Homeland Security and the FBI deployed a large number of agents to continue the investigation and crackdown on illegal immigrants, with ICE (Immigration and Customs Enforcement), as the enforcement agency under the Department of Homeland Security, becoming the main force in this operation.

However, the sudden increase in enforcement quickly led to serious consequences.

On January 7, ICE agents accidentally shot and killed 37-year-old Renée Good during an operation, drawing national attention. Just 17 days later, on January 24, another U.S. citizen, Alex Pretti, was also accidentally shot and killed by federal immigration enforcement officers in the same area.

Two consecutive deadly shootings have completely spiraled out of control in Minnesota. Large-scale protests and riots erupted, even requiring the National Guard to maintain order. Democrats quickly seized on this opportunity, using the deadly shooting by ICE in Minnesota as irrefutable evidence of the agency's out-of-control law enforcement practices.

So why did this affect the US government shutdown on January 31?

In the U.S. constitutional system, the purse strings are controlled by Congress, and the executive branch cannot decide on its own to continue spending money. Each fiscal year, Congress must pass 12 annual appropriations bills, each corresponding to one of 12 policy areas: defense, homeland security, agriculture, transportation, housing, etc. These appropriations bills determine the maximum amount of money a department can spend in that fiscal year, and where that money can be spent. If an appropriations proposal fails to pass, or if the legal authorization for the fiscal year expires and Congress fails to pass new authorization in time, the department will be without a budget and must shut down. This is what is known as a government shutdown.

The normal procedure is that the fiscal year begins on October 1st. If no agreement is reached before October 1st, Congress will pass a temporary funding bill to extend the government's lifeline, setting a new deadline. January 30th, which we are currently focusing on, is the expiration date of this temporary bill. If, by that day, a formal funding bill has not been passed and the temporary bill has not been renewed, the US government will have to shut down, or partially shut down.

These appropriations bills require passage by both the House of Representatives and the Senate. The House of Representatives has already signed them, but the process is stalled in the Senate.

The U.S. Senate requires 60 votes to pass a government funding bill. Currently, the Senate has 53 Republicans, 45 Democrats, and two independent senators allied with the Democrats, giving the Democrats a total of 47 votes. Even if all Republicans unanimously agree, they only have 53 votes, insufficient to unilaterally reach the 60 needed to end the debate.

This means that if the Democrats choose to collectively obstruct the bill, the Republicans must secure at least seven votes from the Democratic camp to get the appropriations bill to the final vote and thus avoid a government shutdown. This is also why Trump has been proposing to abolish the "60-vote requirement" procedural threshold for the past six months.

Therefore, in this context, the Department of Homeland Security budget, including ICE, has become the most controversial and difficult part to reach a consensus on in the current funding negotiations that involve the risk of a government shutdown.

The Democrats' logic is clear: ICE caused two deaths in Minnesota, proving serious problems with the agency's enforcement methods. Why should we continue to fund ICE without substantial reforms and stricter regulations? Democrats are demanding cuts to ICE's size, or at least stricter restrictions.

Republicans countered with a sharper stance: the Minnesota welfare fraud case, involving $9 billion and with most defendants of Somali descent, underscores the need to strengthen, not weaken, immigration enforcement. ICE is a key force in combating illegal immigration and welfare fraud and must be adequately funded.

This antagonism has directly led to a deadlock in Congress over the Department of Homeland Security budget bill, which includes funding for ICE. This issue may even continue as partisan ammunition until the midterm elections at the end of the year, becoming one of the core battlegrounds.

The oft-discussed "Obamacare"

Beyond ICE funding, the issue of healthcare subsidies constitutes the second, and more "structural," point of contention in this round of US government shutdown risk. This controversy is also a legacy issue that was temporarily shelved during the previous government shutdown and has not yet been truly resolved: whether to continue increasing the subsidy budget for the Affordable Care Act (ACA), commonly known as Obamacare.

These subsidies were initially temporary measures introduced during the COVID-19 pandemic, significantly reducing the actual cost of health insurance for low- and middle-income groups through tax credits. They were not made permanent after the pandemic, but officially expired at the end of last year. Due to the failure of Democrats and Republicans to reach an agreement on funding authorization, this issue was "frozen" during the last government shutdown, but it did not disappear; it was simply dragged on until now.

Democrats want to increase the budget, arguing that if subsidies are not continued, millions of Americans' healthcare premiums will skyrocket in the short term, potentially forcing them out of the insurance system altogether. However, Republicans oppose this for reasons similar to the background and causes of the Minnesota welfare fraud case: the pandemic-era healthcare subsidy system has bred systemic fraud. The ACA subsidy is not merely a financial burden issue, but a "gray pool" abused by local nonprofits, insurance companies, and even political networks.

Politics influences people's livelihoods, and people's livelihoods also influence politics.

The period of contention between the two parties over this healthcare budget is intricately linked to numerous hotly debated topics online.

For example, the "American kill line" theory, which sparked heated discussions in Chinese-speaking communities recently, illustrates this: many American families are not destitute; they have jobs, income, and health insurance, but their financial security margin is extremely low. Once they face unemployment, serious illness, accidental injury, or the expiration of health insurance subsidies and rising premiums, their cash flow can be completely depleted in a very short time, plunging them into a state of no return. Mortgage defaults, credit card delinquencies, and snowballing medical bills occur almost simultaneously. Like a character in a game, once their health drops to a critical threshold, no combo is needed; a single critical hit will instantly eliminate them from the game.

The ACA subsidy serves as a final buffer for many families, preventing them from triggering this "dead end." It doesn't make people rich, but it prevents them from falling out of the system entirely after an illness or layoff. This is why the Democrats describe the subsidy issue as an "affordability crisis" rather than "welfare expansion."

It is against this social backdrop that the case that once ignited public opinion—a 26-year-old third-generation rich Ivy League graduate who shot and killed the CEO of America's largest insurance company—why does it satisfy the American public's imagination of a modern "folk hero"?

The insurance company CEO, whose image has been stylized, has become a victim. Healthcare issues are no longer just a policy debate; they are eroding the very foundation of society's sense of security.

When people begin to use extreme events to express their despair for a system, it indicates that the space for discussion about that system has become severely unbalanced. The ACA subsidy dispute was pushed to the intersection of Congress, elections, and government shutdown precisely in this state of imbalance.

Will this closure cause another shock to the crypto?

Will this US government shutdown cause a similar crash in the crypto as the last one?

I think there will still be negative impacts, but the degree may not be as high as last time.

The main reason is that Congress has already passed 6 out of 12 annual appropriations bills. This means that if a comprehensive agreement is not reached by the end of January, the shutdown will be a "partial shutdown," not a full shutdown. This is a fundamental difference compared to the shutdown in October 2025.

The last shutdown was due to a complete budget system failure, lasting 43 days and setting a historical record. This time, even if it happens again, it will primarily target the Department of Homeland Security and a few departments that have not yet received funding. Currently, the crypto seems to have anticipated this, with prices falling in advance. Related reading: " Why Bitcoin Keeps Falling ."

Furthermore, the impact of this government shutdown on the crypto industry may also be reflected at the institutional level.

If the budget impasse persists, Congress will be forced to focus all its political energy on the lowest priority goal of "avoiding a full shutdown," while other issues—especially those requiring bipartisan coordination and complex technical details—will be systematically shelved. The most critical of these is the Clarity Act, which is of great interest to the crypto industry.

The significance of this bill lies not in short-term stimulus, but in institutional certainty: clarifying whether digital assets are securities or commodities, delineating the regulatory boundaries between the SEC and CFTC, and providing compliance anchors for exchanges, DeFi projects, and institutional capital.

The bill passed the House of Representatives in July and was originally expected to go to the Senate for consideration in January. However, if the government falls into another shutdown, this timeline is very likely to be pushed back again.

This will not immediately depress the price of the coin, but it will slow down the pace of institutional funds entering the market and weaken the certainty of the medium- to long-term narrative.

In summary, even if the US government were to shut down again in January, the direct impact on financial markets, especially cryptocurrency prices, is unlikely to replicate the magnitude of the previous shutdown. The current shutdown risk has been largely anticipated and is expected to be more limited in scale.

But we can see more of a "prelude" to the midterm elections at the end of the year in this US government shutdown.

Whether it's ICE funding, ACA healthcare subsidies, or the tug-of-war surrounding welfare fraud and healthcare affordability, these controversies are highly relevant to voters' daily lives and can easily be transformed into clear, conflicting, and easily disseminated political narratives. The government shutdown is evolving from a budget failure into a political battleground set up by both sides in advance for the midterm elections at the end of the year, setting the tone for the political and policy direction in the coming months.

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