Asset Managers Urge SEC to Reinstate “First-To-File” Principle

Asset managers VanEck, 21Shares, and Canary Capital have collectively approached the US Securities and Exchange Commission (SEC) requesting the reinstatement of the first-to-file principle, which is a regulatory framework that guarantees the review and approval of exchange-traded product (ETP) applications in the sequence they are submitted. The trio of leading investment firms argues that the Commission’s recent deviation from this standard has hindered innovation and resulted in an unfair competitive environment, among other adverse effects.

SEC’s Transition From ‘First-To-File’ Principle Indicates Bias: ETF Issuers

In an email sent to SEC Chairman Paul Atkins on June 5, the CEOs of VanEck, 21Shares, and Canary Capital—Jan van Eck, Duncan Moir, and Steven McClurg—articulated significant concerns regarding the Commission’s retreat from the first-to-file principle and the adoption of a simultaneous approval method for new ETP applications.

The correspondence detailed that the “first-to-file” regulation served as a vital cornerstone of equity that nurtured innovation and a first-mover advantage. This approval scheme allegedly fostered a competitive marketplace, enabling smaller asset managers to capture considerable market shares of specific products, thereby enhancing their overall position.

A passage from the letter states:

…If several sponsors were concurrently pursuing similar concepts, those who filed earlier were prioritized for market approval. This facilitated the growth of the ETP sector to $15.4 trillion in investor assets. Emerging, innovative firms like Wisdomtree have successfully risen to become industry leaders; it’s not merely the established mutual fund corporations that have captured a significant ETP market share.

Nevertheless, the chief executives at VanEck, 21Shares, and Canary Capital assert that the SEC’s transition to a simultaneous approval model, as observed with Bitcoin spot ETFs and Ethereum spot ETFs in 2024, fundamentally undermines the necessity for innovation within the ETP sector. They strongly contend that this strategy implies a bias towards larger asset managers who can easily replicate the products of other firms with confidence in obtaining the same launch timetable from the Commission.

While Van Eck, Moir, and McClurg recognize the potential justifications for simultaneous approval, such as alleviating the workload of the Commission’s personnel, they insist that the “first-to-file” principle is crucial for upholding the regulatory integrity of the US ETP market. They call for a prompt return to this governance standard, which they claim will guarantee financial creativity, innovation, and competition.

Crypto Market Snapshot

At the time of this writing, the total cryptocurrency market capitalization is estimated at $3.22 trillion following a 2.41% increase over the past day. Meanwhile, total trading volume currently lies at $109.06 billion.

Featured image from iStock, chart from Tradingview

Editorial Process for bitcoinist is focused on providing meticulously researched, accurate, and impartial content. We adhere to stringent sourcing criteria, and each page is subject to a thorough review by our team of leading technology experts and seasoned editors. This methodology ensures the integrity, relevance, and value of our content for our audience.