VanEck, 21Shares, and Canary Capital Petition SEC for First-to-File Crypto ETP Approvals

VanEck, 21Shares, and Canary Capital have formally requested that the SEC revert to its previous ‘first-to-file’ approval process for crypto exchange-traded products (ETPs), stating this practice benefits the innovation landscape.

This call to action is crucial as it potentially reshapes how ETF approvals are conducted in the U.S. market, impacting innovators’ market share and fairness.

VanEck, 21Shares, and Canary Capital are urging a return to the “first-to-file, first-to-approve” system. Their joint letter argues that simultaneous approvals undermine innovators, favoring replication over original strides. The SEC’s recent approach has blurred advantages previously held by early filers. This move by the issuers intends to spotlight how simultaneous approvals may dilute market share, offering a level field to latecomers. The letter highlights diminished innovation due to current practices. Industrials might assume a more equal playing field, yet initial filers may face challenges, affecting market shares and competitive dynamics.

The SEC’s recent simultaneous approval practice disadvantages innovators and smaller players by rewarding replication rather than original innovation.
— VanEck, ETF Issuer, VanEck

Current SEC approval practices impact crypto market dynamics, especially BTC and ETH ETFs. The ETF landscape is observing potential shifts as regulatory practices undergo scrutiny. Financial implications could emerge through ETF fund inflows and market liquidity changes. Historical precedent illustrates significant market share gains for first movers—as seen when ProShares launched its BTC futures ETF in 2021.

The joint request underscores the importance of regulatory procedures that nurture innovative advantage rather than stifled competition. Making changes now might alter how funds and investors engage within crypto markets, affecting broader industry standards.