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Vanguard, Other Firms Refuse to Trade Spot Bitcoin ETFs

ETF Investing Tools
ETF Investing Tools

While the first day of spot bitcoin ETF trading appeared to be a rousing success with nearly $5 billion in the funds trading hands, big asset managers including Vanguard Group stayed on the sidelines and didn’t allow investors access to the new products.

According to different published reports, Citigroup Inc., Bank of America Corp.’s Merrill Lynch, State Street Corp., UBS Group AG and Edward Jones either refused to permit trading of the new exchange-traded funds, allowed select customers to trade them, or said they were evaluating the situation. Charles Schwab Corp. allowed the spot bitcoin ETFs on its platform, and Robinhood Markets Inc. CEO Vlad Tenev said in a tweet that the company plans to list them “as soon as possible.”

Spot bitcoin ETFs pulled in about $721 million in flows in their first day of trading yesterday, on top of $4.7 billion worth of the funds that traded. Their approval followed more than a decade of wrangling between issuers and the Securities and Exchange Commission (SEC), which denied dozens of the funds tied to the new, digital currency because it was skeptical of issuers’ ability to protect investors from fraud.

Spot Bitcoin Not on Vanguard Platform

While the SEC’s view appeared to shift after losing a key court battle with Grayscale Investments, and as applicants promised security measures to safeguard investors, some asset managers continue to view digital currencies as inappropriate for most investors’ portfolios. Vanguard said the funds “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.”

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“Spot Bitcoin ETFs will not be available for purchase on the Vanguard platform,” Vanguard said in a statement, adding that it continuously evaluates new products for inclusion. “We also have no plans to offer Vanguard Bitcoin ETFs or other crypto-related products.”

In social media posts, users claiming to be Vanguard customers threatened to close their accounts. Those threats may be real and the company risks losing clients, Ric Edelman, founder of the Digital Assets Council of Financial Professionals, told etf.com in an interview.

“Vanguard is taking a paternalistic position, imposing their judgement and viewpoint on their tens of millions of customers,” he said. “The fact Vanguard calls bitcoin speculative does not provide legitimacy for them to not allow access.”

The other so-called wirehouses are probably moving toward adding the ETFs to their lineups, and are proceeding through series of legal, sales and marketing steps in order to get them into their product lines, Edelman said.

“The wirehouses are never first movers,” he said. “They have a lot of laws and regulations they have to make sure they’re conforming with, and they need to make sure their thousands of advisors know what they’re’ talking about.”

With reporting by etf.com reporter Jeff Benjamin


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