VanEck, 21Shares, and Canary urge SEC to revert to ‘first to file, first to approve’ standard for crypto ETFs

Three asset managers — VanEck, 21Shares, and Canary Capital — have co-signed a letter urging the SEC to restore its traditional “first-to-file, first-to-approve” standard for exchange-traded products.

The letter, published on VanEck’s official X account on June 6, expresses concern over the recent departure from its traditional practice of approving ETPs in the order they were filed.

The Commission has adopted a simultaneous approval process, which, according to the fund managers, has disadvantaged smaller firms and stifled innovation in the $15.4 trillion US ETF market.

“When the Commission plays favorites, it costs ETP sponsors money and makes the ETP marketplace less fair,” the companies stated in their joint letter.

The firms noted the launch of the Bitcoin futures ETF in late 2021, where ProShares secured over 90% of market share with just a three-day head start.

They also pointed to the January 10, 2024, simultaneous approval of spot Bitcoin ETPs, where they say the largest firms have gained dominant market share despite filing later than others.

“This significant regulatory shift away from a first-to-file approval principle adversely affects market dynamics in several critical ways,” the letter stated. “It incentivizes replication rather than original innovation, thereby discouraging the considerable investment necessary to develop genuinely innovative products.”

In January 2024, the SEC approved all 11 spot Bitcoin ETFs simultaneously, disregarding the order in which the issuers had filed their applications.

A few months later, the regulator followed the same approach with spot Ethereum ETFs, granting joint approval to all active filings regardless of submission timing.

VanEck and 21Shares were among the earliest firms to file for both spot Bitcoin and Ethereum ETFs, playing a pioneering role in bringing digital asset exposure to the US market.

Following these milestone approvals, both firms, along with Canary Capital, quickly moved to lead the next wave of filings for alternative crypto asset ETFs.

Canary Capital, in particular, made an early push into the altcoin ETF space, submitting proposals for a staked TRON ETF, a Cronos ETF, and other niche crypto products.

However, despite early efforts by these issuers, the SEC’s recent precedent suggests that simultaneous approval, rather than first-to-file prioritization, may again be the outcome, should the Commission decide to greenlight additional crypto ETPs.

Over the past several weeks, the SEC has delayed decisions on multiple altcoin ETF applications, including those tied to Solana, XRP, and Litecoin, among others.

Bloomberg Intelligence’s latest projections place the approval odds for Litecoin and Solana ETFs at 90% this year, with XRP ETFs not far behind at 85%.