Vanguard Clients Are Considering Dumping the Firm as They Decide to Exclude Spot Bitcoin ETFs

Reports indicate that these ETFs are currently unavailable for purchase on various brokerage platforms, including those of Citi, Merrill Lynch, Edward Jones, and UBS. The asset manager’s choice to exclude spot Bitcoin ETFs from its platform has prompted some customers to consider exiting.

As of January 11, The Wall Street Journal reported that Vanguard clarified its stance, stating that it will not facilitate the purchase of new spot Bitcoin ETFs on its brokerage platform. The company explained that these ETFs don’t align with its traditional offerings, emphasizing a focus on asset classes such as equities, bonds, and cash, which it views as the essential elements of a well-balanced, long-term investment portfolio.

Vanguard explicitly mentioned, “Spot bitcoin ETFs will not be available for purchase on the Vanguard platform,” and affirmed, “We also have no plans to offer Vanguard bitcoin ETFs or other crypto-related products.”

Vanguard opted out of the 14 issuers applying for a spot in Bitcoin ETF in 2023, leading some investors to seek alternative platforms for their funds.
Tony Spencer, an apparent Vanguard customer, alleges that a spokesperson mentioned that Vanguard’s refusal to allow spot Bitcoin ETFs is rooted in the product not aligning with the company’s investment philosophy. Spencer claims Vanguard exclusively permits the sale of Grayscale’s flagship Bitcoin product, the Grayscale Bitcoin Trust, which recently transformed into a spot ETF.

Expressing dissatisfaction, Spencer states, “Vanguard’s paternalistic blocking of Bitcoin ETFs does not align with my investment philosophy.” Neil Jacobs, a Bitcoin commentator, echoes this sentiment, revealing plans to transfer funds out of Vanguard and labeling the reported decision as a “terrible business decision.”

Investors at Citi, Merrill Lynch, Edward Jones, and UBS also faced challenges purchasing spot Bitcoin ETFs on their respective platforms, as reported by The Wall Street Journal. They were contacted for comments; responses from these firms are pending.

The Resulting Responses to Actions Taken by Vanguard

In response to the reported decision, UBS is reportedly considering “unsolicited offers” from potential spot Bitcoin ETF investors on a case-by-case basis. A source close to the firm notes that the ETF is only suitable for “aggressive investors” and can be offered exclusively in a brokerage account.
Citi disclosed that a spot Bitcoin ETF is currently accessible to its institutional client base, with ongoing considerations for extending this to individual wealth clients.
Merrill Lynch is adopting a cautious approach, awaiting efficient trading patterns of spot Bitcoin ETFs before deciding to open up Bitcoin product purchases for its clientele. This insight comes from Fox Business reporter Eleanor Terrett, citing an unnamed source.
Interestingly, JPMorgan’s brokerage platform facilitates spot Bitcoin ETF trading. The bank, led by Jamie Dimon, serves as an authorized participant for BlackRock’s iShares Bitcoin Trust ETF. However, in a cautious move, JPMorgan has shared a risk disclosure with prospective investors contemplating trade orders, as revealed by Dan McArdle, co-founder of the blockchain intelligence platform Messari.

Significant Volume Surges for Spot Bitcoin ETFs on Debut Day as BTC Approaches $49,000

On January 10, marking the culmination of a protracted wait for regulatory approval, the inaugural day of trading for spot Bitcoin ETFs unfolded.
The trading debut saw remarkable volumes, exceeding 4.5 billion, predominantly influenced by substantial contributions from BlackRock, Grayscale, and Fidelity’s Bitcoin ETFs.

In tandem with this milestone, the United States Securities and Exchange Commission approved the 19b-4 and Form S-1 applications from ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Valkyrie, Bitwise, and Franklin Templeton. Notably, Hashdex is still awaiting S-1 approval.