Vanguard Receives Backlash Over Ethereum ETF Ban But There’s A Catch

Vanguard Group, one of the leading investment advisors in the USA, is facing significant backlash for its refusal to allow Spot Ethereum ETFs on its platform. This decision comes despite growing interest in cryptocurrency assets and recent regulatory developments. Earlier, the firm provided a similar stance on Spot Bitcoin ETFs.

Vanguard Attracts Criticism For Not Offering Spot Ethereum ETFs

Eric Balchunas, Bloomberg’s Senior ETF analyst, expressed his disappointment on social media. In a post on X, he vehemently criticized Vanguard’s stance on Spot Ethereum ETFs. Moreover, he called the move “silly” and suggested that the firm is playing a “Nanny role.”

Balchunas sarcastically argued that Vanguard’s investors are “the smartest money on the planet” and are capable of making informed decisions about their investments. “Crypto was able to shift the stance of some in the highest rungs of government but not Vanguard, who maintains their platform ban for Ether ETFs which are ‘not aligned’ with building a well-balanced, long-term portfolio,” Balchunas wrote on X.

Despite his critique, Balchunas seemed to understand Vanguard’s cautious approach on Ethereum and Bitcoin ETFs but still found it excessive. Moreover, the analyst acknowledged that Vanguard operates differently from other asset managers. He noted that the company functions more like a co-op, focusing less on hunting for revenue.

“They’ve taken in nearly a billion a day for over a decade, and so they’re not envious of other people’s hit ETFs,” he added. The investment advisor’s decision comes shortly after the U.S. Securities and Exchange Commission (SEC) approved the 19b-4 filings from several issuers for Spot Ethereum ETFs.

However, these ETFs are not yet available for trading. The SEC still needs to clear the S-1 registration statements from fund issuers. Most expect the launch of these products by July 4, 2024, as predicted by the Bloomberg analyst previously.

In a statement to Blockworks, a Vanguard spokesperson clarified the company’s position. “While we continuously evaluate our brokerage offering and evaluate new product entries to the market, Spot Ether ETFs will not be available for purchase on the Vanguard platform,” the spokesperson said.

Also Read: Alike Bitcoin, Vanguard Has A Clear NO For Spot Ethereum ETFs

Bloomberg Analyst Hints At A Ray Of Hope

The firm has consistently distanced itself from the crypto world, labeling it an immature asset class. The spokesperson reiterated, “We believe that cryptocurrency products are not aligned with our [offerings] 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.”

Balchunas highlighted a potential silver lining in the form of Vanguard’s new CEO, Salim Ramji. Ramji, a former BlackRock executive, played a significant role in launching BlackRock’s Bitcoin ETF (IBIT). Moreover, he is believed to have contributed to BlackRock’s ETHA Ethereum ETF as well.

Hence, Balchunas speculated that Ramji’s crypto-friendly background could influence Vanguard’s future stance on cryptocurrency products. “The only hope at all is that their new CEO…is clearly into crypto. Will he be able—or even try—to move the needle on this internally or just opt to bury that part of himself? Answer unknown,” Balchunas pondered.

Also Read: BlackRock Submits a Revised S-1 Form for its Spot Ethereum ETF