Three major financial firms, VanEck, 21Shares, and Canary Capital, sent a letter to the U.S. Securities and Exchange Commission (SEC), raising concerns about how new exchange-traded funds (ETFs) are approved.
According to the letter, shared by James Seyffart on X, the SEC previously followed a “first-to-file, first-to-approve” rule when deciding which ETFs could launch. The crypto ETF issuers that submitted an application for an ETF initially were typically approved first, which allowed them to have an edge over others.
The same happened with the introduction of Bitcoin and Ethereum ETFs, where top ETF issuers had the upper hand at the beginning.
However, according to VanEck, 21Shares, and Canary Capital, the SEC is now adopting a different method, which is harming small firms and slowing growth in the ETF market.
SEC favoritism undermines innovation in the ETF market. pic.twitter.com/HM7P2Dm0XP
— VanEck (@vaneck_us) June 6, 2025
In their message to SEC Chairman Paul Atkins, they mention that the move makes it difficult for small or new firms to compete with the more established firms.
If top companies have the advantage, they will attract more investors and control a bigger piece of the market, which reduces the availability of ETFs that could profit traders.
If smaller firms can launch new ETFs more easily, investors might get more products that interest them or which could offer higher returns.
Seeking fair crypto ETFs approvals
The firms also warn that the SEC’s current approach could discourage companies from creating new ETFs altogether, which would limit choices for investors. They want the SEC to modify its process so that it is fairer and inspires more new crypto ETF issuers.
If the SEC pays attention, traders and investors would benefit from more ETF options, which could help them get better returns and better manage their risks. Right now, no statement from the SEC has been made about the situation.
card
Moreover, the letter was sent to other commissioners, like Hester Peirce, who has expressed interest in clearer crypto legislation. Should the U.S. regulator accommodate these suggestions, intending crypto ETF issuers can file early to have an edge since the approval timeline has become more predictable.
Meanwhile, spot BTC and ETH ETFs continue to register mixed performances. For instance, BlackRock’s BTC ETF failed to register any inflow in the last day despite leading in inflows over the past few months.
