Asset manager Vanguard’s apparent decision not to allow the purchase of spot Bitcoin exchange-traded funds (ETF) on its platform has seemingly pushed a few customers toward the exit door.
According to a Jan. 11 report from The Wall Street Journal, Vanguard said it won’t offer the new spot Bitcoin ETFs on its brokerage platform as it did not align with its traditional offerings.
“Spot bitcoin ETFs will not be available for purchase on the Vanguard platform,” said the company in a statement to the WSJ. “We also have no plans to offer Vanguard bitcoin ETFs or other crypto-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.”
Vanguard wasn’t among the 14 issuers to apply for a spot Bitcoin ETF last year and some investors have seen recent moves as a reason to move their funds to other platforms.
One apparent Vanguard customer, Tony Spencer claims a spokesperson told him that Vanguard isn’t allowing spot Bitcoin ETFs for purchase because the product “doesn’t fit with Vanguard’s investment philosophy.”
Spencer also claims Vanguard only allows investors to sell Grayscale’s flagship Bitcoin product, GBTC, which was recently converted into a spot ETF.
NEW: @Vanguard_Group, the world’s second largest asset manager behind @BlackRock, is reportedly blocking its customers from buying into the new $BTC Spot ETFs, saying the products “don’t fit with Vanguard’s investment philosophy.”
Now we’ll start to see how institutional… https://t.co/LmZodeYyad
— Eleanor Terrett (@EleanorTerrett) January 11, 2024
Coinbase’s senior engineering manager Yuga Cohler was among others who said he will be converting his Roth 401(k) savings at Vanguard to Fidelity, which issued one of the 10 spot Bitcoin ETFs that launched on Jan. 11.
“Vanguard’s paternalistic blocking of Bitcoin ETFs does not fit in with my investment philosophy,” Cohler added.
Bitcoin commentator Neil Jacobs said he is also in the process of transferring funds out of Vanguard in response to the reported decision. “Terrible business decision by Vanguard,” he said.
Vanguard refuses to let customers buy #Bitcoin ETFs with their own money.
So customers are closing their accounts‼️ pic.twitter.com/11o1tOHR9S
— Bitcoin Archive (@BTC_Archive) January 11, 2024
Customers of investment firms Citi, Merill Lynch, Edward Jones and UBS reported they were also unable to purchase spot Bitcoin ETFs on those respective platforms, according to the WSJ. Cointelegraph contacted the firms for comment but didn’t receive an immediate response.
However, it is understood that UBS is considering certain offers from prospective spot Bitcoin ETF investors and is making assessments on a case-by-case basis, a source close to the firm told Cointelegraph. The ETF can only be offered in a brokerage account and is only suitable for aggressive investors.
It is also understood that some of the ten approved spot Bitcoin ETFs are on its platform, but not all.
Meanwhile, a Citi spokesperson told Cointelegraph that spot Bitcoin ETF is already available for its institutional client base and the firm is in the process of evaluating the products for its individual wealth clients.
Merrill Lynch is reportedly waiting to see whether the spot Bitcoin ETFs trade efficiently before deciding to offer the purchase of the Bitcoin products, according to Fox Business reporter Eleanor Terrett, who cited an unnamed source.
Meanwhile, spot Bitcoin ETF trading was accessible on JPMorgan’s brokerage platform. JPMorgan is an authorized participant of BlackRock’s IBIT product. However, the Jamie Dimon-led bank has shared a risk disclosure to prospective investors considering placing a trade order, according to screenshots shared by Dan McArdle, co-founder of blockchain intelligence platform Messari.
Bitcoin ETFs are like rap albums in the late ’80s. Vanguard won’t even carry them and here’s JPM slapping a Parental Advisory label on $IBIT https://t.co/Pe7MY9az86
— Eric Balchunas (@EricBalchunas) January 11, 2024
Related: Spot Bitcoin ETFs record notable volume on day 1 — BTC price nearly hits $49K
The first day of trading came after a long-awaited regulatory approval on Jan. 10.
Spot Bitcoin ETF trading volumes topped 4.5 billion on the first day of trading, with most of the flows coming from BlackRock’s IBIT, Grayscale’s GBTC and Fidelity’s FBTC product.
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. Hashdex has yet to receive S-1 approval.
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