With Vanguard not allowing users to invest in the spot Bitcoin ETFs now available in the United States, customers are threatening to leave the company, citing a misalignment with the investment philosophy.
Vanguard Group, the world’s second-largest asset management company, has blocked users from buying the newly approved Bitcoin spot exchange-traded funds (ETFs) on its brokerage platform.
The asset manager stated that these new investment products do not align with its traditional business offerings. Consequently, Vanguard issued a “trade cannot be completed” warning to users attempting to purchase BlackRock’s iShares Bitcoin Trust (IBIT) or Grayscale Bitcoin Trust (GBTC).
“Buy orders are not currently accepted for this security. Securities may be unavailable for purchase at Vanguard due to a number of variables, including regulatory restrictions, corporate actions, or various trading and/or settlement limitations,” the message reads.
Vanguard Has No Plans for Bitcoin Spot ETFs
According to a Wall Street Journal report, the company, with $7.3 trillion in assets under management, has no plans to offer any of the BTC ETFs.
Vanguard was not among asset managers that applied for spot Bitcoin ETFs with the United States Securities and Exchange Commission (SEC) last year and does not intend to do so.
“Spot Bitcoin ETFs will not be available for purchase on the Vanguard platform. We also have no plans to offer Vanguard bitcoin ETFs or other crypto-related products.”
The company claims these assets do not align with its traditional offerings, such as bonds, equities, and cash.
“Our perspective is that these products do not align with our offerings focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio.”
Vanguard Users Threaten to Close their Accounts
Tony Spencer, a Vanguard customer, mentioned in a post on X that a spokesperson informed him that the company’s reluctance to allow spot Bitcoin ETFs was rooted in the product not fitting with its investment philosophy.
Furthermore, Vanguard purportedly only permits investors to sell Grayscale’s flagship Bitcoin product, GBTC, which recently gained approval to be converted into a spot ETF.
Wow. It is worse than I thought. I called and the answer I received was “Currently we aren’t allowing those to be purchased as it doesn’t fit with Vanguard’s investment philosophy.”
Me: “Ok but you let me buy GBTC in the past.”
Him: “Yes I believe you can only sell that now.”
— Tony Spencer (@notsleepy) January 11, 2024
With Vanguard not allowing users to invest in the spot Bitcoin ETFs now available in the United States, customers are threatening to leave the company, citing a misalignment with the investment philosophy.
Some customers, including Coinbase engineering manager Yuga Cohler, disclosed his intention to transfer his Roth 401(k) savings from Vanguard to Fidelity. Fidelity is one of the issuers of the 10 spot Bitcoin ETFs that debuted on January 11.
“Vanguard’s paternalistic blocking of Bitcoin ETFs does not fit in with my investment philosophy,” Cohler said.
Bitcoin commentator Neil Jacobs echoed similar sentiments, noting that he is currently in the process of moving his funds from Vanguard to other asset management companies.
Jacobs criticized Vanguard’s decision not to allow Bitcoin spot ETFs, labeling it a “terrible business decision”.
