Crypto fund issuers press SEC to reinstate ‘first-to-file’ ETF approval process

A trio of cryptocurrency fund managers urged the U.S. Securities and Exchange Commission to go back to an approach that approved exchange-traded products on a first-come, first-served basis and said the current approach makes the “marketplace less fair.”

VanEck, 21Shares, and Canary Capital stated that they are concerned about the agency’s “recent failure to practice a ‘first-to-file’ approach,” where the SEC prioritizes greenlighting financial products based on the order of arrival. The firms voiced those concerns in an open letter sent to SEC Chair Paul Atkins and posted to X on Friday.

“The failure to follow this practice has frustrated the regulatory principles of innovation, fairness and competition in the financial markets,” the firms said in the letter. “To that end, we respectfully request your prompt reinstatement of the Commission’s longstanding first-to-file approval principle for registration statements. Simply put, when the Commission plays favorites, it costs ETP sponsors money and makes the ETP marketplace less fair.”

The SEC is currently weighing dozens of applications for ETFs, including ones tracking SOL, XRP, and DOGE, among other assets. Many of these proposals were filed over the past year following an expectation that the agency under the Trump administration would be more permissive.

During the Biden administration, following a pivotal court ruling, the SEC approved the listing and trading of spot Bitcoin ETFs and, subsequently, spot Ethereum ETFs. In a somewhat unusual move, the firms argued that the SEC approved all spot Bitcoin ETF issuers to list their products on the same day, despite receiving proposals for the 11 different funds at different times. A return to a first-to-file approach is needed because, without it, the market becomes more concentrated, creating a “competitive imbalance,” they said.

“Moreover, the reduced incentive for pioneering product development has broader implications,” the firms wrote. “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.”

VanEck’s Head of Digital Assets Research, Matt Sigel, previously told The Block that the firm was the first to file for a Solana ETF in June 2024, on the expectation that the SEC would return to a fairer, time-weighted standard for approving financial products.  

The SEC did not respond to a request for comment.

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