- Main stakeholders urge SEC procedural changes, impacting crypto ETF market.
- Firms demand return to fair approval process.
- Potential effects on market competition and product innovation.
The action affects the $15.4 trillion U.S. ETF market, potentially altering competitive dynamics and innovation by favoring early filers.
VanEck, 21Shares, and Canary Capital submitted a letter to the SEC requesting a return to the first-to-file rule. This request was spurred by concerns over fairness in the crypto ETF approval process. The co-founders stated,
“The shift in process incentivizes replication rather than original innovation. Firms may stop developing new products if filing early no longer provides any strategic benefit.”
The current approval process has been criticized for not incentivizing original innovation. The letter emphasizes that the shift might deter firms from developing new products if filing priority no longer has strategic value.
A return to the first-to-file rule could restore competitive equity, potentially leading to early innovation. The lack of this rule has implications on the financial landscape for innovative issuers.
The 2021 precedent with ProShares Bitcoin futures ETF indicates significant market share gained through early approval. A fair procedural change could have similar disruptive impacts on market dynamics today.
The financial stakes and interests of stakeholders are significant, potentially reshaping how regulatory approval processes affect the emergent crypto markets. This underscores the critical discussion on maintaining innovation incentives.
Insights suggest potential outcomes include a shift in strategic filing behaviors of asset managers. Historical trends show how first-approval advantages can decisively influence market positions, affecting investment dynamics globally.
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