Spot Bitcoin ETF: Vanguard Backtracks, Vows Not to Join the Train

Vanguard, one of the leading investment management firms is taking a cautious stance on the burgeoning market of spot bitcoin ETFs.

Spot Bitcoin ETF: a No-Go Area for Vanguard

Despite the recent approval of 11 such funds by the United States Securities and Exchange Commission (SEC), Vanguard customers found themselves unable to participate in the first day of trading for these funds.

The primary reason cited by Vanguard was the highly speculative and unregulated nature of the broader crypto market, which the company believes conflicts with its long-term investing philosophy. Vanguard’s decision not to offer spot Bitcoin ETFs is part of a broader strategy that restricts certain types of investments on its platform.

A company’s representative stated that, besides bitcoin ETFs, other high-risk instruments such as leveraged ETFs were also not allowed on the platform. Additionally, they do not intend to provide Vanguard Bitcoin BTC custody or related offerings.

According to the representative, “Our long-standing view is that cryptocurrencies’ extreme volatility runs counter to our mission of assisting investors earn positive real returns over the long term. This includes ETFs and other crypto-related products.”

Notably, top market critics like Peter Schiff often point out this high volatility as a basis to project how, in the long run, Bitcoin price will shed its gains to zero.

First Trading Day Hiccup

Vanguard’s cautious approach might prove to be right considering the strain that is rocking some of the listed spot Bitcoin ETFs as trading opened. 

According to reports, clients attempting to invest in BlackRock’s IBIT (Bitcoin ETF) through its platform were met with notifications stating that the trade could not be completed, citing reasons ranging from regulatory restrictions to trading and settlement limitations

This was not the case with other platforms like Charles Schwab, where clients could buy the spot bitcoin ETFs using their brokerage accounts. Users attempting to purchase shares on the Fidelity platform were reminded that the investment was contingent upon a “Designated Investments Agreement,” which recognized the user as a seasoned investor with a high threshold for risk.

Before this time, experts predict that on the first day, BlackRock’s IBIT will see a significant inflow into Bitcoin ETFs, however, with current trends, this milestone is being threatened.