The U.S. Securities and Exchange Commission (SEC) is facing increasing pressure to reintroduce the 'first-to-file priority review principle' in the cryptocurrency ETF approval process. ETF issuers such as VanEck, 21Shares, and Canary Capital have strongly criticized the SEC's review method, arguing that it hinders competition and financial innovation through a recent joint letter.
They pointed out that the 'review in order of submission' principle previously applied to traditional financial product approvals is being ignored in recent cryptocurrency ETF approval processes. They claimed that a 'priority approval' practice for specific companies has emerged in the approval procedures for BTC and ETH ETFs, which undermines fair competition in the market.
The letter noted that "the loss of incentives for leading financial product development undermines investor choice and market efficiency, ultimately weakening the SEC's core mission of investor protection, creating fair and orderly markets, and supporting capital formation." They also emphasized that to continue leading financial innovation, the United States must support a clear and consistent regulatory framework that promotes creativity and entrepreneurship.
These demands came as expectations for regulatory changes in the cryptocurrency ETF market have grown, particularly with former President Trump expanding his pro-cryptocurrency stance. Trump has pledged to reclaim U.S. leadership in cryptocurrency innovation, challenging the current Biden administration's regulatory approach.
This letter was submitted as the SEC is on the verge of approving an Ethereum spot ETF in July, potentially sparking controversy surrounding the fairness and equity of future approval decisions. The ETF industry is urging the SEC to establish transparent and predictable review procedures, emphasizing consistent regulation as a key element for market growth.
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