Back to main

Vanguard’s Exclusion of Spot Bitcoin ETFs Spurs Investor Exodus to Alternative Platforms

Vanguard’s recent decision to exclude spot Bitcoin exchange-traded funds (ETFs) from its platform has raised concerns among some of its customers, leading them to consider alternative investment avenues.

The move comes as Vanguard emphasizes its commitment to traditional asset classes like equities, bonds, and cash, according to Investing Insider.

Vanguard officially stated that they will not offer spot Bitcoin ETFs for purchase on their platform and have no plans to introduce any Bitcoin or crypto-related products.

This decision is in line with their focus on conventional investment offerings, as they believe these assets are the foundation of a well-balanced, long-term investment portfolio.

Vanguard did not participate in the applications for spot Bitcoin ETFs in 2023, which has prompted investors to explore other platforms.

Tony Spencer, a Vanguard customer, claimed that the company informed him that they are not permitting the purchase of spot Bitcoin ETFs because it contradicts Vanguard’s investment philosophy.

Currently, Vanguard only allows investors to sell Grayscale’s flagship Bitcoin product, which was recently transformed into a spot ETF.

In response to Vanguard’s stance, some customers, including Coinbase’s senior engineering manager Yuga Cohler, are moving their funds to other platforms like Fidelity, which launched one of the ten spot Bitcoin ETFs on January 11.

Cohler expressed dissatisfaction with Vanguard’s decision, stating that it doesn’t align with his investment philosophy.

Neil Jacobs, a Bitcoin commentator, also voiced his disapproval and is in the process of transferring his funds out of Vanguard, describing the decision as a “terrible business decision.”

READ MORE: Congress Calls for Investigation into SEC Following Twitter Account Compromise

The Wall Street Journal reported that customers of investment firms such as Citi, Merrill Lynch, Edward Jones, and UBS faced similar restrictions on purchasing spot Bitcoin ETFs on their respective platforms.

Some of these firms are still evaluating their approach to these products.

UBS is reviewing unsolicited offers from prospective spot Bitcoin ETF investors on a case-by-case basis and is currently making the ETF available only for “aggressive investors.”

Not all approved spot Bitcoin ETFs are available on their platform.

Citi has made a spot Bitcoin ETF available for institutional clients and is considering its adoption for individual wealth clients.

Merrill Lynch is monitoring the efficiency of spot Bitcoin ETF trading before deciding to offer these products to their customers.

In contrast, JPMorgan’s brokerage platform allowed spot Bitcoin ETF trading, with JPMorgan being an authorized participant of BlackRock’s iShares Bitcoin Trust ETF. However, JPMorgan disclosed potential risks to prospective investors considering these trades.

The first day of trading for spot Bitcoin ETFs, following regulatory approval, saw trading volumes exceeding 4.5 billion dollars, primarily driven by BlackRock, Grayscale, and Fidelity’s Bitcoin ETFs.

Additionally, the United States Securities and Exchange Commission approved applications from various ETF issuers, including ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Valkyrie, Bitwise, and Franklin Templeton, with Hashdex awaiting S-1 approval.

Discover the Crypto Intelligence Blockchain Council

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Read on Crypto Intelligence Investment Disclaimer