In a move that could reshape the landscape of exchange-traded product (ETP) approvals, prominent ETF issuers VanEck, 21Shares, and Canary Capital have jointly penned a letter to the U.S. Securities and Exchange Commission (SEC), urging the agency to reinstate its "first-to-file" approval principle. The letter, posted on VanEck's official X account on June 6, 2025, criticizes the SEC's recent deviation from this long-standing practice, arguing that it stifles innovation, undermines competition, and ultimately harms investors.
The "first-to-file" approach, as the name suggests, prioritizes ETF applications based on their submission date, granting approval to those who filed first. The ETF issuers argue that the SEC's recent abandonment of this principle, particularly in the context of crypto ETPs, has created an uneven playing field, favoring larger companies and disincentivizing pioneering product development. They claim that the SEC's recent practice of approving multiple crypto ETFs simultaneously, regardless of their filing date, has frustrated the regulatory principles of innovation, fairness, and competition.
As an example, the letter points to 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. Similarly, the SEC approved Ethereum ETFs in the same way a few months later, grouping VanEck and 21Shares, who were among the first to file, with latecomers during final approval.
The ETF issuers contend that this shift in process "incentivizes replication rather than original innovation," suggesting that firms may become less inclined to develop novel products if there is no strategic advantage to filing early. They argue that the reduced incentive for pioneering product development has broader implications, diminishing investor choice, compromising market efficiency, and fundamentally undermining the commission's mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.
The firms also referenced 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. They suggest that the reduced incentive for pioneering product development has broader implications. It diminishes investor choice, compromises market efficiency, and fundamentally undermines the commission's mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.
The letter emphasizes that a return to the first-to-file approach is crucial for fostering a vibrant and competitive financial marketplace. The firms argue that when the SEC "plays favorites," it costs ETP sponsors money and makes the ETP marketplace less fair. They believe that by reinstating the first-to-file principle, the SEC can reaffirm its commitment to nurturing entrepreneurship, creativity, and genuine innovation in the financial markets.
Following the approvals of Bitcoin and Ethereum ETFs, VanEck, 21Shares, and Canary Capital have moved forward and filed 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. The outcome of these applications, and the SEC's response to the call for a return to the first-to-file principle, could significantly impact the future of crypto ETFs and the broader ETF market.
