Vanguard Fails to Support Bitcoin ETFs, Users Threaten to Close Accounts

Additionally, spot Bitcoin exchange-traded funds were unavailable for trading on various brokerage platforms, including UBS, Citi, Edward Jones, and Merrill Lynch.

The decision by Vanguard, an asset manager, not to permit the buying of spot Bitcoin exchange-traded funds (ETFs) on its platform has resulted in some clients threatening to exit.

Vanguard Fails to Support Spot Bitcoin ETF

A January 11 report shows the firm will not offer the new spot Bitcoin exchange-traded funds on its brokerage platform. This is because they are incompatible with its traditional offerings.

In a statement, the firm said that spot bitcoin exchange-traded funds’ purchases on the Vanguard platform would be unavailable. Additionally, it noted it does not intend to offer Vanguard bitcoin exchange-traded funds or other crypto-associated products.

The firm also stated that according to its view, the products fail to align with its offer, which focuses on asset classes, for instance, bonds, equity, and cash. According to Vanguard, these are the fundamentals of a properly-balanced and long-term investment portfolio.

Vanguard was not one of the issuers that applied for a spot in the Bitcoin exchange-traded fund last year. A few investors have seen its latest strategies as a motivation to transfer their funds to other platforms.

Tony Spencer, a Vanguard client, asserts that a representative revealed that Vanguard is not permitting spot Bitcoin exchange-traded funds for purchase. The reason is that the product ‘fails to fit with its investment viewpoint.’

Benefits of Bitcoin ETFs

Further, Tony notes that Vanguard only permits investors to sell the Grayscale Bitcoin Trust, Grayscale’s leading Bitcoin product. Lately, it was changed into a spot exchange-traded fund.

Yuga Cohler, Coinbase’s senior engineering manager, claimed he would change his Roth 401 (k) savings at the company to Fidelity. The financial services corporation issued one of the ten spot Bitcoin exchange-traded funds unveiled on January 11.

Choler added that Vanguard’s authoritarian hindering of Bitcoin exchange-traded funds fails to align with his ideology. Neil Jacobs, Bitcoin commentator, revealed that he is also planning to move funds out of Vanguard following the reported verdict.

He said Vanguard’s verdict is a horrible business decision. According to a newspaper report, clients of investment companies, including Merrill Lynch, UBS, Citi, and Edward Jones, revealed their inability to buy spot Bitcoin exchange-traded funds on the respective platforms. Despite a request for comment, some firms failed to respond.

Vanguard Advises Users to Withdraw their Bitcoin Fund

A source close to UBS told a media outlet that the firm is contemplating ‘unwanted offers’ from potential spot Bitcoin exchange-traded fund investors and is conducting evaluations on a case-by-case basis.

They also claimed that the exchange-traded fund can only be offered in a brokerage account and is appropriate for ‘aggressive investors’ only. There is also a belief that some of the ten sanctioned spot Bitcoin exchange-traded funds are on its network, but some are not.

In the meantime, a Citi representative revealed to a media outlet that a spot Bitcoin exchange-traded fund is currently available for its institutional customers, and the company is assessing the products for its wealthy customers.

Bitcoin ETF Fails to Support Vanguard Product Offering

Quoting an anonymous source, Eleanor Terrett, a reporter, said Merrill Lynch is allegedly waiting to see if the spot Bitcoin exchange-traded funds trade efficiently. This will enable it to decide if or not to offer the buying of Bitcoin products. In the meantime, people could trade spot Bitcoin exchange-traded funds on JPMorgan’s brokerage platform.

JPMorgan is an approved member of BlackRock’s iShares Bitcoin Trust exchange-traded fund. Nevertheless, screenshots shared by Dan McArdle show the bank has shared a risk disclosure to potential investors regarding placing a trade order. Dan is the co-founder of Messari, a blockchain intelligence platform.

The first trading day was on January 10, following a lengthy regulatory sanction. On the first day of trading, spot Bitcoin exchange-traded fund trading volumes rose to 4.5 billion. Most flows originated from Grayscale, Blackrock, and Fidelity’s Bitcoin exchange-traded funds.

Further, various funds’ 19b-4 and Form S-1 applications were approved by the U.S. Securities and Exchange Commission (SEC). They included Invesco Galaxy, Wisdom Tree, Bitwise, ARK 21Shares, Franklin Templeton, VanEck, and Valkyrie. Hashdex has not yet acquired an S-1 approval.

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