When Vanguard disables spot Bitcoin ETFs, consumers threaten to close their accounts

Bitcoin ETF

A few clients appear to have been pushed out by asset management Vanguard’s apparent plan to prohibit the buying of spot Bitcoin exchange-traded funds (ETF) on its platform.

Vanguard stated that it will not provide the new spot Bitcoin ETFs on its brokerage platform since they do not correspond with its usual offerings, according to a Wall Street Journal report dated January 11.

The business informed the WSJ in a statement that “Spot bitcoin ETFs will not be available for purchase on the Vanguard platform. We also don’t intend to offer Vanguard bitcoin ETFs or any other products related to cryptocurrencies.”

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“In our opinion, these products are not in line with our offerings, which are concentrated on asset classes like cash, bonds, and stocks – assets that Vanguard considers to be the fundamental components of a long-term, well-balanced investment portfolio.”

Some investors have decided to transfer their funds to other platforms in light of recent developments, as Vanguard was not one of the 14 issuers who submitted an application for a spot Bitcoin ETF last year.

According to Tony Spencer, a purported Vanguard client, a representative informed him that Vanguard is prohibiting the purchase of spot Bitcoin ETFs since the offering “doesn’t fit with Vanguard’s investment philosophy.”

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Additionally, according to Spencer, Vanguard only permits investors to sell GBTC, Grayscale’s primary Bitcoin product, which was just transformed into a spot ETF.

Among those who announced that they would be switching their Roth 401(k) funds from Vanguard to Fidelity, which released one of the top 10 Bitcoin ETFs that debuted on January 11 was Yuga Cohler, senior engineering manager at Coinbase.

Cohler continued, “My investment philosophy does not align with Vanguard’s paternalistic blocking of Bitcoin ETFs.”

In reaction to the reported decision, bitcoin analyst Neil Jacobs stated he is also in the process of withdrawing money from Vanguard. “Vanguard made a terrible business decision,” he remarked.

The Wall Street Journal stated that clients of investing firms Citi, Merill Lynch, Edward Jones, and UBS reported they were also unable to buy spot Bitcoin ETFs on those respective platforms. When Cointelegraph reached out to the companies for comment, no one got back to them right away.

However, Fox Business reporter Eleanor Terrett, citing an unknown source, claims that Merrill Lynch is holding off on offering the purchase of the Bitcoin products until it sees if the spot Bitcoin ETFs trade smoothly.

On JPMorgan’s brokerage platform, spot trading for Bitcoin ETFs was available in the interim. JPMorgan is permitted to use BlackRock’s IBIT product. Nevertheless, screenshots provided by Dan McArdle, co-founder of blockchain intelligence platform Messari, indicate that the Jamie Dimon-led bank has provided a risk statement to potential investors thinking about placing a trading order.

On January 10, the eagerly expected regulatory approval led to the first day of trade.

On the first day of trading, spot Bitcoin ETF trading volumes exceeded 4.5 billion, primarily from BlackRock’s IBIT, Grayscale’s GBTC, and Fidelity’s FBTC product.

The 19b-4 and S-1 petitions of ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Valkyrie, Bitwise, and Franklin Templeton were also accepted by the U.S. Securities and Exchange Commission. It has not yet received S-1 approval for Hashdex.

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The disabling of spot Bitcoin ETFs by Vanguard has triggered a significant and vocal response from consumers, who are now considering closing their accounts in protest.

The controversy sheds light on the intricate dynamics between traditional financial institutions and the burgeoning world of cryptocurrency investments.

As investors grapple with the limitations imposed on their preferred investment vehicles, the incident highlights the need for open dialogue and adaptation within the financial industry.

Whether this event serves as a catalyst for change in how these institutions approach cryptocurrency offerings remains to be seen.

Nevertheless, it underscores the importance of responsiveness to consumer sentiments in an evolving financial landscape where digital assets continue to gain prominence.

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Written by
Rock Buivy
Over the years, I've dedicated countless hours to researching and analyzing various crypto betting platforms, understanding their features, strengths, and weaknesses. This knowledge has allowed me to produce in-depth, well-rounded reviews that help users make informed decisions when it comes to choosing the right platform for their needs.