Crypto ETF Issuers Want ‘First-to-File’ SEC Rule Back

Three asset managers, VanEck, 21Shares, and Canary Capital, have penned a letter together to the United States Securities and Exchange Commission (SEC), asking the agency bring back the “first-to-file, first-to-approve” rule for exchange-traded products (ETPs). 

The letter, which was posted on VanEck’s official X account on June 6, criticized the SEC’s trend of approving multiple crypto ETFs all at once, instead of honoring the order in which applications were submitted.

The first page of the letter | Source: X

The fund managers argue that the new approval style gives larger companies an unfair edge and leaves smaller companies at a disadvantage. “When the Commission plays favourites, it costs ETP sponsors money and makes the ETP marketplace less fair,” the letter stated.

The companies pointed to the 2021 launch of the first Bitcoin futures ETF as an example. ProShares, which received approval slightly ahead of others, dominated with over 90% market share just days after its release. 

The trio also referenced the January 10, 2024 approvals, when the SEC greenlit 11 spot Bitcoin ETFs at once. While some firms had been working on these filings for years, those who filed later still reaped equal rewards.

The letter said that the shift in process “incentivizes replication rather than original innovation.” They suggest that firms may stop developing new products if filing early no longer provides any strategic benefit. 

The SEC also approved Ethereum ETFs the same way a few months after approving Bitcoin ETFs. VanEck and 21Shares were among the first to file for both Bitcoin and Ethereum spot products but were grouped with latecomers during final approval.

After those approvals, VanEck, 21Shares, and Canary Capital quickly moved on to file for the next wave of crypto ETFs. Canary, in particular, submitted applications for altcoin-based products such as staked TRON and Cronos ETFs. However, the SEC has delayed decisions on multiple filings for Solana, XRP, and Litecoin ETFs.

According to James Seyffart , a CFA and research analyst at Bloomberg Intelligence, the odds of this altcoin getting approved stand at 90%, with XRP ETFs close behind at 85%. But if the SEC sticks to this approval method, those who took the initiative will once again be lumped in with late filers.