Sec urged to stop supporting the late filer in the Crypto ETF race due to market share

Top investment companies demand the SEC to revive the rules of filing orders to protect crypto ETF innovations and prevent giants from controlling the market.

As large companies exploit system shifts, the SEC urged them to restore first file rules

Vanneck, a Canary Capital, and executives at the 21-share asset management company, issued a joint letter to U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins on June 5, calling on agents to revive the “first file” approval framework for exchange trade products (ETPs). Signatories argued that the committee’s recent practice of allowing recent approvals would imply fairness, reduce innovation, and undermine the competitive positioning of small issuers, particularly in the rapidly growing crypto segment, regardless of submitting an order.

In the letter, the company sharply criticized the departure from the SEC’s historical norm, saying:

Recently, this principle has been eroded. Instead of approving in the filing order, the SEC shifted to concurrent approval.

“This dilutes the benefits of FirstMovers, allowing larger companies to wait for innovation, and grant equal regulatory access by submitting similar products. From the start, market ETPs have gained more assets and dynamic important shares for fewer issuers to compete. They quoted multiple examples, including the launch of several spot Bitcoin Exchange Trade Funds (ETFs) on January 10, 2024, saying, “The latest submission companies have secured the largest market share.”

The SEC’s decision to simultaneously approve 11 spot Bitcoin ETFs in January 2024 includes offerings from BlackRock and Faithful — has escalated criticism that the process supports industry giants. The SEC argues that approval is driven solely by regulatory standards, but the results have encouraged new scrutiny about whether the current framework protects competition, and establishes existing market power, particularly in sectors where first-movers’ advantage is critical.

Executives highlighted in their letter that the current regulatory process has a broad impact on market integrity and investor outcomes. They warned:

This change in regulations has serious consequences. It hinders innovation, promotes replication, and drives market concentration. Larger entities benefit, but agile innovators get punished.

“The outcome is not dynamic, not fair, not efficient. Investor choices are struggling, and market equity and capital formation, the core mission of the SEC, is compromising,” they stressed. The letter was closed by urging the SEC to return to a policy that respects filing sequences to ensure fair treatment and maintain US leadership in financial innovation.