Vanguard users threaten to close accounts after firm blocks spot Bitcoin ETFs

Several Vanguard Group clients are dissatisfied with Vanguard’s decision not to allow the purchase of spot Bitcoin ETFs on its brokerage platform.
Brayden Lindrea
Posted by Brayden Lindrea January 12, 2024 3 Mins Read
Several Vanguard Group clients are dissatisfied with Vanguard’s decision not to allow the purchase of spot Bitcoin ETFs on its brokerage platform.

Asset manager Vanguard’s apparent decision not to allow the purchase of spot Bitcoin exchange-traded funds (ETF) on its platform has seemingly pushed a few customers toward the exit door.

According to a Jan. 11 report from The Wall Street Journal, Vanguard said it won’t offer the new spot Bitcoin ETFs on its brokerage platform as it did not align with its traditional offerings.

"Spot bitcoin ETFs will not be available for purchase on the Vanguard platform,” said the company in a statement to the WSJ. “We also have no plans to offer Vanguard bitcoin ETFs or other crypto-related products.”

“Our perspective is that these products do not align with our offer 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."

Vanguard wasn’t among the 14 issuers to apply for a spot Bitcoin ETF last year and some investors have seen recent moves as a reason to move their funds to other platforms.

One apparent Vanguard customer, Tony Spencer claims a spokesperson told him that Vanguard isn’t allowing spot Bitcoin ETFs for purchase because the product “doesn’t fit with Vanguard’s investment philosophy.”

Spencer also claims Vanguard only allows investors to sell Grayscale’s flagship Bitcoin product, GBTC, which was recently converted into a spot ETF.

Coinbase’s senior engineering manager Yuga Cohler was among others who said he will be converting his Roth 401(k) savings at Vanguard to Fidelity, which issued one of the 10 spot Bitcoin ETFs that launched on Jan. 11.

“Vanguard’s paternalistic blocking of Bitcoin ETFs does not fit in with my investment philosophy,” Cohler added.

Bitcoin commentator Neil Jacobs said he is also in the process of transferring funds out of Vanguard in response to the reported decision. “Terrible business decision by Vanguard,” he said.

Clients from investment firms Citi, Merill Lynch, Edward Jones and UBS reported they were also unable to purchase spot Bitcoin ETFs on those respective platforms, according to the WSJ. Cointelegraph contacted the firms for comment but didn’t receive an immediate response.

However, Merrill Lynch is reportedly waiting to see whether the spot Bitcoin ETFs trade efficiently before deciding to offer the purchase of the Bitcoin products, according to Fox Business reporter Eleanor Terrett, who cited an unnamed source.

Meanwhile, spot Bitcoin ETF trading was accessible on JPMorgan’s brokerage platform. JPMorgan is an authorized participant of BlackRock’s IBIT product. However, the Jamie Dimon-led bank has shared a risk disclosure to prospective investors considering placing a trade order, according to screenshots shared by Dan McArdle, co-founder of blockchain intelligence platform Messari.

Related: Spot Bitcoin ETFs record notable volume on day 1 — BTC price nearly hits $49K

The first day of trading came after a long-awaited regulatory approval on Jan. 10.

Spot Bitcoin ETF trading volumes topped 4.5 billion on the first day of trading, with most of the flows coming from BlackRock’s IBIT, Grayscale’s GBTC and Fidelity’s FBTC product.

The U.S. Securities and Exchange Commission also approved the 19b-4 and S-1 applications of ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Valkyrie, Bitwise and Franklin Templeton. Hashdex has yet to receive S-1 approval.

Magazine: Should you ‘orange pill’ children? The case for Bitcoin kids books

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