Vanguard has said that it would not go on the Bitcoin ETF bandwagon after criticizing the product’s long-term sustainability.
Leading investment management company Vanguard is approaching the developing market of spot bitcoin exchange-traded funds (ETFs) with caution.
Spot Bitcoin ETF: An Area Vanguard Should Avoid
Vanguard customers were unable to take part in the first day of trading for these funds, even though the United States Securities and Exchange Commission (SEC) just approved 11 of these funds.
Vanguard’s main justification was that the larger cryptocurrency market is extremely speculative and uncontrolled, which goes against the company’s long-term investing tenets. As part of a larger plan to limit specific investment kinds on its platform, Vanguard has decided not to sell spot Bitcoin ETFs.
A company’s representative indicated that, besides bitcoin ETFs, other high-risk securities such as leveraged ETFs were also not allowed on the platform. Furthermore, they have no plans to offer custody services for Vanguard Bitcoin BTC or other associated services.
The spokesman stated:
“Our long-standing view is that cryptocurrencies’ extreme volatility runs counter to our mission of assisting investors earn positive real returns over the long term. This includes ETFs and other crypto-related products.”
Notably, prominent market critics like Peter Schiff frequently use this extreme volatility as a foundation for their predictions about how the price of Bitcoin would eventually lose all of its gains.
Initial Trading Day Difficulty
Given the pressure that is trembling several of the listed spot Bitcoin ETFs as trading opened, Vanguard’s conservative stance may turn out to be the right one.
Clients using BlackRock’s platform to invest in its IBIT (Bitcoin ETF) reportedly received messages claiming that the trade could not be completed, citing a variety of reasons such as trading and settlement limits and regulatory restrictions.
With other platforms, such as Charles Schwab, customers may use their brokerage accounts to purchase the spot bitcoin ETFs, which was not the case here. On the Fidelity site, users who tried to buy shares were informed that the investment was subject to a “Designated Investments Agreement,” which identified the user as an experienced investor with a high risk tolerance.
Before then, experts estimate that a sizable inflow into Bitcoin ETFs will occur on the first day of BlackRock’s IBIT; however, given current developments, this milestone is in jeopardy.