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The Spot Bitcoin ETFs started trading on Thursday, January 11, 2024, marking a historic moment for the crypto arena. However, all’s not well with major Wall Street investment firms. Recently, Vanguard, Merrill Lynch, Edward Jones, and Northwestern Mutual have expressed strong criticism against Bitcoin ETFs. These firms noted that investing in these assets is banned for their clients.
Why are Wall Street firms against Bitcoin ETF adoption?
The above-mentioned firms are preventing retail investors from accessing the newly approved Spot BTC ETFs, as reported by FOX Business. These financial institutions have chosen not to provide their clients with exposure to the burgeoning crypto market.
The move contradicts the Securities and Exchange Commission’s (SEC) decision to approve 11 Spot Bitcoin ETFs. The SEC’s decision marked a pivotal moment for the crypto market, which is now nearing $2 trillion.
The inclusion of Bitcoin (BTC) in a regulated investment vehicle like a Spot ETF allows retail investors to access crypto asset investments through broker-dealers. This eliminates the need for reliance on unregulated crypto exchanges. Additionally, it eradicates the requirement for investors to qualify as accredited investors, a criterion for the Bitcoin futures ETF launched in 2021.
The restriction on this new cryptocurrency investment avenue has led some clients to reconsider financial institutions that embrace the opportunity. In a recent post on X, Yuga Cohler, Senior Engineering Manager at Coinbase, revealed plans to transfer his $401,000 savings from Vanguard to Fidelity. According to the FOX report, he rebuked the investment firm’s approach. He said, “Vanguard’s paternalistic blocking of Bitcoin ETFs does not fit in with my investment philosophy.”
Bitcoin ETF issuer BlackRock‘s competitor, Vanguard, defended its stance, stating that the new ETFs don’t align with the institution’s investment ideology. Moreover, the firm emphasized its commitment to aiding investors in generating positive real returns in the long run. Hence, they noted that the crypto space’s speculative and unregulated nature would obstruct them from achieving their goals.
On the other hand, the internal communication records of Merrill Lynch and its clients highlight its current policy prohibits investment in Spot BTC ETFs. However, there is a possibility of a policy change in the future. According to FOX Journalist Eleanor Terrett’s post on X, Merrill Lynch is going to monitor how the ETFs perform to make a final decision.
Also Read: Grayscale Dominates As Spot Bitcoin ETFs Debut With Over $4 Billion Trading
Will Spot BTC ETFs be banned?
Edward Jones and Northwestern Mutual have mirrored Vanguard’s approach. These firms have informed clients of their decision to join the Bitcoin ETF ban. This indicates that Bitcoin ETFs would be banned at an institutional level, especially among the major Wall Street investment firms.
However, eradicating these ETFs from the U.S. would never be possible, considering the SEC’s decision. If it considered a nationwide Bitcoin ETF ban, the regulatory body would never have approved the proposals. The first Bitcoin ETF was proposed in 2013, marking a decade-long effort to achieve the milestone. Hence, if the SEC has decided to approve the proposals now, it is most likely to stick to its decision.
Moreover, CoinRoutes CEO Dave Weisberger expressed his views on the Wall Street firms’ decision to ban Bitcoin ETF investments. He stated that it’s common for firms to conduct due diligence on individual ETFs before offering them to clients. However, he also noted, “Vanguard’s attitude shows it may have more to do with the asset itself, rather than the performance of the ETF.”
Also Read: Spot Bitcoin ETF: Vanguard Backtracks, Vows Not to Join the Train
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