Exchange-traded fund (ETF) issuers VanEck, 21Shares and Canary Capital sent a letter to the US Securities and Exchange Commission (SEC) urging a return to the “first-to-file” principle of approving ETF applications in the order they were submitted to the regulator.
The companies argued that by failing to abide by the first-to-file principle, the default process for application approval until crypto ETFs debuted, the SEC diminishes healthy competition and hinders financial innovation. The letter reads:
“The reduced incentive for pioneering product development has broader implications. 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.”
“Continued global leadership of the United States in financial innovation is deeply connected to regulatory frameworks that actively support and reward entrepreneurship, creativity, and genuine innovation,” the letter continues.
Digital asset ETF filings accelerated following the inauguration of US President Donald Trump, as asset managers and crypto companies rushed to gain approval for new investment vehicles in anticipation of a friendlier regulatory climate in the US.
Related: SEC to shape crypto policy with ‘notice and comment,’ says Atkins
SEC delays decisions on staking, altcoin ETFs as applications multiply
Although institutional interest in altcoin and staking ETFs continues to grow and ETF filings continue to multiply, the SEC has delayed its decision on several altcoin and crypto-staking ETFs.
In May, the regulator postponed its decision deadline on listing Grayscale’s spot Solana (SOL) Trust ETF to October.
SEC officials also delayed the approval of staking and XRP (XRP) ETFs in May, a development that did not surprise analysts.
“The SEC typically takes the full time to respond to a 19b-4 filing,” Bloomberg ETF analyst James Seyffart wrote in a May 20 X post.
“Almost all of these filings have final due dates in October. Early decisions are out of the norm,” the analyst wrote.
Additionally, the SEC recently responded to the effective registration statements for the REX-Osprey staked ETFs, raising concerns that the investment vehicles may not qualify as ETFs due to the business structure of the underlying fund.
This caused a delay in the ETF launch despite many analysts forecasting that the effective registration statements signaled imminent launches of these investment products.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
