Vanguard's Decision to Reject Bitcoin ETFs Prompts Investor Exodus
Summary:
Asset manager Vanguard's decision not to support Bitcoin ETFs has caused some clients to consider taking their investments elsewhere. The company explained that cryptocurrencies do not align with their traditional investment focus on equities, bonds, and cash. Customers from other financial institutions such as Citi, Merill Lynch, Edward Jones, and UBS also reported they were not able to purchase Bitcoin ETFs on those platforms. However, JPMorgan allows Bitcoin ETF trading on their platform. The first day of Bitcoin ETF trading saw considerable volumes, with U.S. Securities and Exchange Commission approving several applications.
Vanguard, the asset management company, seems to have turned away several clients by declining to support spot Bitcoin exchange-traded funds (ETFs) on its platform. As detailed in a January 11 report by The Wall Street Journal, Vanguard explained that it would not provide the new Bitcoin ETFs on its brokerage platform as they did not coincide with the company's conventional portfolio products. The firm clarified that neither will Vanguard's Bitcoin ETFs become available nor any other cryptocurrency-related products, as they do not support the company's focus on equities, bonds, and cash, seen by Vanguard as the foundation of a balanced, long-term investment portfolio. Vanguard was not one of the 14 companies last year to request a spot Bitcoin ETF, causing some investors to consider transferring their funds to other platforms. One such disenfranchised customer, Tony Spencer, stated that Vanguard explained that it did not allow spot Bitcoin ETF purchases as they were not compatible with the company's investing ideals. In addition to this, Spencer further said that Vanguard only permits investors to sell Grayscale’s flagship Bitcoin product, GBTC, which was recently re-branded as a spot ETF.
Yuga Cohler, the senior engineering manager at Coinbase, and others indicated that they would be moving their Roth 401(k) savings from Vanguard to Fidelity, which launched its own spot Bitcoin ETF on January 11. Cohler stated that Vanguard's refusal to support Bitcoin ETFs was incompatible with his investment strategy. Neil Jacobs, a commentator on Bitcoin, also stated that he was shifting funds out of Vanguard due to this decision, which he labeled as a "poor business choice."
Additionally, clients of Citi, Merill Lynch, Edward Jones, and UBS reported they were also unable to buy spot Bitcoin ETFs on those platforms, according to the WSJ. No immediate response was obtained from these firms when Cointelegraph reached out for a comment. However, according to one unnamed source quoted by Fox Business reporter Eleanor Terrett, Merill Lynch is reportedly waiting to see if the spot Bitcoin ETFs trade efficiently before deciding to offer them.
Contrarily, JPMorgan does allow spot Bitcoin ETF trading on its brokerage platform and is an authorized participant of BlackRock’s IBIT product. Nevertheless, the bank, led by Jamie Dimon, has issued a risk disclosure for investors considering placing a trade order, says Dan McArdle, co-founder of blockchain intelligence platform Messari.
Related: The first day of trading with spot Bitcoin ETFs recorded significant volumes, with BTC prices almost reaching $49K, following regulatory approval on January 10. The trading volumes for spot Bitcoin ETFs exceeded 4.5 billion on the first day, primarily driven by BlackRock’s IBIT, Grayscale’s GBTC, and Fidelity’s FBTC. The U.S. Securities and Exchange Commission also approved the 19b-4 and S-1 applications of ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Valkyrie, Bitwise, and Franklin Templeton. Approval for Hashdex's S-1 application is still pending. A magazine question resonates: should children 'orange pill'? The case is made for Bitcoin kids' books.
Published At
1/12/2024 4:05:59 AM
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