Three asset managers – Vanek, 21Share, Canary Capital – have co-signed a letter urging the SEC to restore the traditional “first-to-first-to-approval” standard for exchange-sold products.
letter, Published Vaneck’s official X account on June 6th raises concerns over a recent departure from the traditional practice of approving ETPs in the order they are submitted.
The committee has adopted a simultaneous approval process, and the US ETF market at 15.4 trillion is curbing small businesses and stifling innovation, according to fund managers.
“When the committee fulfills its favourite, it costs ETP sponsors and reduces the fairness of the ETP market,” the company said in a joint letter.
Companies focused on launching the Bitcoin futures ETF in the second half of 2021, where ProShare secured more than 90% of its market share with a three-day head start.
They also pointed out the concurrent approval of the Spot Bitcoin ETP on January 10, 2024. There, despite being behind the rest of the others, the largest companies say they have gained dominant market share.
“This important regulatory shift, which moves away from the principle of approval to files from the start, negatively affects market dynamics in several important ways,” the letter states. “It encourages replication rather than original innovation, thereby discouraging the significant investment needed to develop truly innovative products.”
In January 2024, the SEC simultaneously approved all 11 Bitcoin ETFs, ignoring the orders the issuer had filed the application for.
A few months later, the regulator followed the same approach in the Spot Ethereum ETFS, giving joint approval to all aggressive submissions regardless of the timing of submission.
Vaneck and 21Shares are one of the early companies submitting to both Spot Bitcoin and Ethereum ETFs, and are pioneering roles in bringing digital asset exposure to the US market.
Following approval of these milestones, both companies quickly moved along with canary capital to lead the next wave of filing for another cryptocurrency ETF.
In particular, canary capital pushed early into the Altcoin ETF space and submitted proposals Tron etf has soaked in it, Cronos ETF, and other niche crypto products.
However, despite early efforts by these publishers, the SEC’s recent precedent suggests that if the committee decides to greenlight additional cryptographic ETPs, concurrent approval, rather than prioritizing files, is once again the outcome.
Over the past few weeks, the SEC has delayed the decisions on multiple Altcoin ETF applications, including those related to Solana, XRP, Litecoin, and more.
The latest forecast from Bloomberg Intelligence has set approval odds for Litecoin and Solana ETFs to 90% this year, with the XRP ETF not far behind 85%.