Vanguard has no plans to join spot bitcoin ETF fray

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Vanguard has no immediate plans to add spot bitcoin exchange traded funds to its platforms, the company said, even as trading volumes ramped up on rival platforms.

The Securities and Exchange Commission has approved the first US ETFs that will hold bitcoin. The regulator approved the ETFs from Ark Invest and 21 Shares, Bitwise, BlackRock, Fidelity, Franklin Templeton, Grayscale, Hashdex, Invesco, Valkyrie, VanEck and WisdomTree.

But Vanguard wants no part of the spot bitcoin ETF hype, for now.

“While we continuously evaluate our brokerage offer and evaluate new product entries to the market, spot bitcoin ETFs will not be available for purchase on the Vanguard platform,” Vanguard said.

This article was previously published by Ignites, a title owned by the FT Group.

The company also doesn’t plan to offer Vanguard bitcoin ETFs or other cryptocurrency-related products.

“Our perspective is that these products do not align with our offer 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,” the company said.

Vanguard’s decision to shun spot bitcoin ETFs “is very much on brand for Vanguard,” Jeff DeMaso, editor of The Independent Vanguard Advisor, wrote to his readers.

“The firm has long tried to ‘look out’ for smaller investors,” he wrote.

“For example, the firm kicked leveraged ETFs off its platform several years ago. Vanguard also hasn’t touched crypto with a 10-foot pole,” DeMaso wrote.

However, he said he had bought a futures-based bitcoin ETF in his personal Vanguard account: the ProShares Bitcoin Strategy ETF.

“Simply put, this is contradictory. Bitcoin futures are meant to [and generally have] track bitcoin’s price,” DeMaso said. “If Bitcoin is too volatile or doesn’t have a place in a long-term portfolio [the reasons Vanguard has said it’s not allowing purchases of the new spot ETFs], well, the same should apply to the futures-based bitcoin ETFs.”

The company’s decision not to include spot bitcoin ETFs on its own platform has caused some Vanguard customers to do business with other companies.

Spot bitcoin ETFs will be available on Schwab, Fidelity, SoFi and Wells Fargo’s platforms.

“I’m working on transferring assets out of there, and then I will close my Vanguard account,” Neil Jacobs posted on X. “Terrible business decision by Vanguard.”

Jacobs describes himself as a “Bitcoiner” on X and is the co-founder of FOMO21, a bitcoin apparel and merchandise shop.

It is common for new ETFs to only be available for trading on self-directed platforms, such as Fidelity and Schwab, because there are fewer restrictions than on other wealth management platforms, said Todd Rosenbluth, head of research at VettaFi.

It is unclear if other wealth management platforms will add spot bitcoin ETFs to their platforms.

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Representatives from Citi, Edward Jones, Merrill Lynch, Morgan Stanley and UBS did not immediately respond to requests for comment.

“I wouldn’t expect firms that already did not allow crypto-adjacent products on their platforms to suddenly allow any of the spot bitcoin ETFs, just because they were approved to launch,” Matt Apkarian, associate director of product development at Cerulli Associates, said.

“The firms have a stance on whether they believe digital asset-focused investments are suitable for their clients and whether allowing their advisers to invest in them on behalf of their clients would expose their firm to risk, and they are likely to stick to that until some significant regulation is passed governing the digital asset market.”

Many firms don’t think offering these products on their platforms is a “make or break decision with current and potential clients,” Apkarian said.

*Ignites is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignites.com.