Crypto ETF Issuers Demand SEC Reinstate ‘First-to-File’ Advantage—Wall Street Grumbles

Asset managers are pushing regulators to revive a rule that lets the fastest filer leapfrog competitors—because nothing says 'healthy markets' like a regulatory speed race.

The SEC's old 'first-to-file' system gave early applicants a temporary monopoly on new crypto ETFs. Now issuers want it back, claiming it 'streamlines innovation.' Critics call it a loophole for lazy copycats.

Meanwhile, traditional finance players clutch their pearls—apparently shocked that crypto would optimize for speed over paperwork. Welcome to the jungle, folks.

The fund managers argue that the new approval style gives larger companies an unfair edge and leaves smaller companies at a disadvantage. “When the Commission plays favourites, it costs ETP sponsors money and makes the ETP marketplace less fair,” the letter stated.

The companies pointed to the 2021 launch of the first Bitcoin futures ETF as an example. ProShares, which received approval slightly ahead of others, dominated with over 90% market share just days after its release. 

The trio also referenced the January 10, 2024 approvals, when the SEC greenlit 11 spot Bitcoin ETFs at once. While some firms had been working on these filings for years, those who filed later still reaped equal rewards.

The letter said that the shift in process “incentivizes replication rather than original innovation.” They suggest that firms may stop developing new products if filing early no longer provides any strategic benefit. 

The SEC also approved ethereum ETFs the same way a few months after approving Bitcoin ETFs. VanEck and 21Shares were among the first to file for both Bitcoin and Ethereum spot products but were grouped with latecomers during final approval.

After those approvals, VanEck, 21Shares, and Canary Capital quickly moved on to file for the next wave of crypto ETFs. Canary, in particular, submitted applications for altcoin-based products such as staked TRON and Cronos ETFs. However, the SEC has delayed decisions on multiple filings for Solana, XRP, and Litecoin ETFs.

According to James Seyffart, a CFA and research analyst at Bloomberg Intelligence, the odds of this altcoin getting approved stand at 90%, with XRP ETFs close behind at 85%. But if the SEC sticks to this approval method, those who took the initiative will once again be lumped in with late filers.

Also Read: We’re on Track for XRP ETF Approval: Bitwise CIO