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Sunday, April 14, 2024

Vanguard Group Won’t Let Its Clients Buy The New Bitcoin ETFs: Here’s Why

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Vanguard Group – the $7.7 trillion asset manager outsized only by BlackRock – has blocked client access to all newly listed Bitcoin spot ETFs.

The firm has also ruled out launching a Bitcoin ETF product of its own, claiming the asset doesn’t align with the firm’s investment philosophy.

Banks Blocking Bitcoin Access

Multiple Twitter and Reddit users confirmed on Thursday that they could not purchase any Bitcoin-backed funds through their Vanguard client accounts.

Twitter user @notsleepy said he called the firm about his inability to buy into the Grayscale Bitcoin Trust (GBTC) – a pre-existing Bitcoin grantor trust that began trading as a spot ETF on Thursday.

The company told him that Vanguard isn’t “allowing those to be purchased as it doesn’t fit with Vanguard’s investment philosophy.”

Though GBTC was previously available for trade, Vanguard now prevents investors from buying more shares, and only allows them to sell their current holdings.

When attempting to buy any Bitcoin ETF security via a retirement brokerage account, customers are presented with the following message:

“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.”

Vanguard Dislikes Commodities

As reported by The Block, a spokesperson for Vanguard said that the firm has no plans to enable the purchase of Bitcoin ETFs on its platform, citing their high volatility.

According to Bloomberg ETF analyst Eric Balchunas, Vanguard’s rejection of Bitcoin is hardly surprising. For example, Vanguard founder John Bogle warned investors in November 2017 to “avoid Bitcoin like the plague.”

“Bogle did not like commodities in general,” said Balchunas during an X spaces on Thursday, emphasizing that Bitcoin is not a productive asset with cash flows or a coupon attached.

Vanguard hasn’t shied away from Bitcoin-related investments in the past, however. The asset manager owns a 9% stake in MicroStrategy (MSTR), one of the largest institutional owners of Bitcoin.

It also made a nine-figure investment in shares for Bitcoin mining firms like Riot Platforms and Marathon Digital last year.

Other wealth managers including the Bank of America-owned Merrill Lynch have also denied customers access to Bitcoin ETFs.

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