In a bold move that could reshape the future of crypto ETFs, three major issuers – VanEck, 21Shares, and Canary Capital, have submitted a formal letter to the U.S. Securities and Exchange Commission (SEC). The letter highlights growing concerns over how the agency approves spot Bitcoin and Ethereum ETFs. Specifically, the VanEck, 21Shares, and Canary letter to the SEC urges a return to a “first-to-file, first-to-review” approach that rewards early movers and encourages innovation.
The Issue: Simultaneous Approvals Undermine Innovation
One of the central arguments in the VanEck, 21Shares, and Canary letter to the SEC is that the SEC’s recent practice of approving multiple ETFs at once, regardless of when they filed, eliminates any advantage for companies that take initiative.
In January and May 2024, the SEC greenlit multiple Bitcoin and Ethereum spot ETFs simultaneously. This move deviated from the past where applications were reviewed in chronological order, giving early filers like VanEck and 21Shares an edge for being first. The issuers argue this new practice disrupts market fairness and discourages smaller firms from innovating.
First-Mover Advantage: A Competitive Edge at Stake
The letter mentions the case of October 2021. At that time, ProShares gained over 90% of the futures-based Bitcoin ETF market within a few days. This happened because the SEC approved its product three days earlier than others. The VanEck, 21Shares, and Canary letter to SEC highlights how being first to market can create a huge advantage. Removing this advantage gives more power to companies with stronger distribution, not necessarily better products.
This unfair structure, the issuers argue, could stifle healthy competition and reduce investors’ access to diverse, high-quality offerings.
A Call for Reform and Transparency
The VanEck, 21Shares, and Canary letter to the SEC doesn’t merely criticize – it proposes a solution: re-adopting the first-in, first-out (FIFO) framework for ETF reviews. This approach ensures that applications are evaluated based on submission time, rewarding preparation and commitment. The companies believe this reform would better align with the SEC’s mission of promoting fair and efficient markets.
They also urge more transparency in how they determine approval timelines. Without clear guidelines, applicants face uncertainty, and strategic planning becomes nearly impossible.
Potential Industry Impact
If the SEC heeds the recommendations from the VanEck, 21Shares, and Canary letter to SEC, it could trigger a broader shift in how all crypto-related ETFs move forward. Such a change may level the playing field and inspire increased participation from smaller issuers, potentially fueling a new wave of digital asset innovation.
However, if the status quo persists, we may see the ETF market dominated by a few large players, consolidating control and diminishing investor choice.
