Financial giant Vanguard has explained why the firm does not make spot bitcoin exchange-traded funds (ETFs) available on its trading platform. A Vanguard executive stressed that cryptocurrency is “an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.”
Vanguard Explains Why It Disallows Spot Bitcoin ETFs
Vanguard published a blog post titled “No Bitcoin ETFs at Vanguard? Here’s why” on Jan. 24, explaining the firm’s stance on cryptocurrency and why it does not allow clients to trade the newly approved spot bitcoin exchange-traded funds (ETFs). Vanguard serves more than 50 million investors worldwide as of Dec. 31, 2023. The firm manages around $8 trillion globally.
Following the approval of 11 spot bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) earlier this month, Vanguard has drawn attention for disallowing its clients to trade the newly launched products. The company also has no plans to launch its own spot bitcoin ETFs.
Janel Jackson, Vanguard’s global head of ETF Capital Markets and Broker and Index Relations, explained in the blog post why her firm is not offering spot crypto ETFs on its brokerage platform. “In Vanguard’s view, crypto is more of a speculation than an investment. This is at the root of our decision to not offer crypto products, whether our own or others,” the executive described, emphasizing:
While crypto has been classified as a commodity, it’s an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.
“With equities, you own a share of a company that produces goods or services, and many also pay dividends. With bonds, you get a stream of interest payments. Commodities are real assets that meet consumption needs, have inflation-hedging properties, and can play a role in certain portfolios,” she noted.
Nonetheless, she expressed Vanguard’s interest in blockchain technology, stating: “We do have a lot of interest in blockchain, the technology behind cryptocurrencies. We believe its application to a number of other uses besides crypto will make capital markets more efficient, and we’ve been actively involved in research to use blockchain technology.”
Regarding whether Vanguard is planning to launch its own spot crypto ETFs, Jackson said:
Given the current state of crypto as an asset class, Vanguard does not have plans to launch its own bitcoin ETF or any crypto-related products.
“When deciding what investment products to offer, we consider a range of factors, including whether we believe they have enduring investment merit and meet our clients’ needs,” she clarified. “While the discussion about bitcoin and cryptocurrencies, in general, has increased recently, we do not currently believe that there is an appropriate role for them to play in long-term portfolios. A rigorous process guides every Vanguard product launch.”
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