Vanguard is the world’s second-largest asset manager, and currently handles about $11 trillion in funds.
It’s a hugely influential company given it decides which products can be invested in by millions of people around the world.
But when exchange-traded funds tracking Bitcoin’s spot price burst onto the scene in January 2024, the U.S. giant made clear it wasn’t impressed.
A detailed blog post was released that set out why these ETFs wouldn’t be offered through its platform, despite BTC’s healthy returns.
“While crypto has been classified as a commodity, it’s an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.”
At this point, I’d normally link to the blog in question… but I can’t. It appears to have been taken down from the company’s website. And according to Bloomberg, that’s because a U-turn might be on the horizon.
Vanguard is reportedly considering whether to enable its customers to start dabbling in Wall Street products that offer indirect exposure to the likes of Bitcoin and Ether. And given rumors are swirling that ETFs focused on smaller altcoins may soon be approved by the Securities and Exchange Commission, that range could expand further still.
You could argue that this is a significant admission of defeat. BlackRock, the world’s largest asset manager, has established itself as an undisputed market leader through its iShares Bitcoin Trust. Fidelity — third in the rankings after Vanguard — has also launched products of its own.
But more than that though, this could lead to a significant amount of capital winding its way into crypto ETFs. Let’s not forget that Vanguard has $11 trillion in assets under management, not to mention more than 50 million customers worldwide. Even if just 1% of these investors decided to dabble in BTC for the first time, that’s a staggering 500,000 people.
So… why the change of heart? On the face of it, you could argue that insatiable demand for digital assets among institutions is a driver here, and some Vanguard clients may be sitting there wondering this: if it’s good enough for them, why isn’t it good enough for me?
More widely though, this is probably linked to the new management right at the top of the company. Salim Ranji, who’s now the CEO, used to work at BlackRock and has previously spoken about this cryptocurrency’s promise.
As we mentioned back in July, it likely hasn’t been lost on Vanguard that it’s been in a rather awkward position too. Despite adopting a skeptical tone about BTC, the asset manager owns more Strategy stock than anyone else, primarily because it operates funds tracking indices like the Nasdaq 100.
When asked for confirmation whether crypto ETFs are on the horizon, a spokesperson was a little bit coy — telling Bloomberg:
“We continuously evaluate our brokerage offer, investor preferences, and the evolving regulatory environment. If and when a decision is made, clients will hear directly from Vanguard.”
Polls have repeatedly shown that there’s healthy curiosity surrounding Bitcoin among everyday investors. Meanwhile, there have been huge leaps surrounding the regulation of digital assets in both the U.S. and Europe, with Donald Trump vowing to create a strategic reserve for taxpayers.
Nonetheless, it’s possible that Vanguard’s founder — the late Jack Bogle — would be deeply unhappy with any change in tone. Back in 2017, when there were fears of a Bitcoin bubble as it traded close to a mere $10,000, he had urged the public to avoid this cryptocurrency “like the plague.”
“Bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support Bitcoin except the hope that you will sell it to someone for more than you paid for it.”
Bogle brushed off criticism by saying that his point would still stand if BTC managed to hit $20,000, which it did just one month later.
If confirmed, this could prove to be a positive catalyst for the world’s biggest cryptocurrency. Vanguard opening the doors could see Bitcoin ETFs embraced by greater numbers of everyday investors, and not just deep-pocketed institutions. Given many analysts argue there hasn’t been all that much retail interest in the bull run so far, this could be a game changer.
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