By Bansari Mayur Kamdar

Approvals on new exchange-traded funds, including bitcoin spot ETFs, could face delays if the U.S. government shuts down next month for the fourth time in a decade.

Hundreds of thousands of federal workers, including nearly 90% of the Securities and Exchange Commission's (SEC) 4,600 employees, will be furloughed without pay if Congress fails to provide funding for the fiscal year starting Oct. 1.

The SEC Chair Gary Gensler recently warned in a media interview that the agency will operate with a "skeletal" staff during a shutdown.

"I'm not sure if ETFs that have been filed for approval can move forward with the government shutdown," said Todd Rosenbluth, head of research at VettaFi.

"The SEC has to reject new ETFs and the absence of personnel could allow launches to occur."

For instance, the SEC has pushed back the decision on whether to approve applications for spot Bitcoin ETFs to mid-October, but that could potentially be delayed further should the shutdown continue for that long.

"This would just delay yet another decision on the never ending spot Bitcoin decision," said Todd Sohn, ETF and technical strategist at Strategas Securities.

"I'd wager investor and issuer patience is already running thin with regards to that product, so a shutdown adds to the agitation."

Further, listed funds may face increased volatility, analysts warned.

"ETFs are just pass through vehicles ... impact on the underlying markets will obviously impact ETFs," said Hector McNeil, co-CEO and founder of HANetf.

"People will also probably pause if they're about to launch (new ETFs) and wait for steady waters."

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Ira Iosebashvili and Anil D'Silva)