- Vanguard rejects Spot Bitcoin ETFs, citing weak investment cases and volatility concerns.
- Clients express frustration, initiating a response rally on social media.
In a surprising turn of events, Vanguard, the $7.7 trillion asset management giant, has announced that it will not be participating in the newly approved Spot Bitcoin ETFs, diverging from the trend set by other major firms. The decision comes on the heels of the US Securities and Exchange Commission’s (SEC) landmark approval of 11 Spot Bitcoin ETFs, a move that has generated significant excitement in the digital asset industry.
Even before the SEC’s approval yesterday, Vanguard had made its stance clear, stating that it had no intention of offering a spot Bitcoin ETF or any other crypto-related products. The firm went further, labeling the investment case for digital assets as “weak.” This decision stands out as the SEC reversed a decade-long trend of denying similar investment products.
Why?
Interestingly, Vanguard’s reluctance extends beyond just verbal opposition. Numerous reports indicate that the asset management giant is actively blocking its clients from trading the newly approved Bitcoin investment products on its platform. This move is in stark contrast to other major players in the industry, such as BlackRock and Fidelity, who have embraced the Spot Bitcoin ETFs.
The SEC‘s approval triggered a rush of trading activities on Thursday morning, with the first hour alone witnessing trading volumes surpassing 1.7 billion. However, Vanguard’s skepticism about the asset class seems unshaken.
Vanguard’s spokesperson emphasized that most crypto assets lack intrinsic economic value and do not generate cash flows. Moreover, the high volatility associated with cryptocurrencies is deemed inconsistent with Vanguard’s overarching goal of helping investors generate positive real returns over the long term.
Meanwhile, Industry experts are predicting significant inflows into Spot Bitcoin ETFs, with BlackRock potentially breaking records by attracting $2 billion in inflows on the first trading day.
Response
In response to Vanguard’s decision to abstain from participating in the newly approved Spot Bitcoin ETFs, clients have expressed their discontent. One client initiated a response rally, commenting, “I have a retirement account in Vanguard.” This sentiment reflects the frustration and disappointment felt by some investors who were hoping for exposure to the emerging digital asset class through Vanguard’s platform.
The divergence from industry trends, coupled with the SEC’s approval opening new avenues for investment, has sparked conversations among Vanguard’s clientele its approach to cryptocurrencies. It remains to be seen how this dissenting sentiment may impact Vanguard’s standing in the rapidly evolving landscape of digital asset investments.
