Vanguard Opens Bitcoin ETF Access Despite Calling Crypto Highly Speculative

TLDR

• Vanguard executive John Ameriks compared bitcoin to “digital Labubu,” calling it speculative like the collectible plush toy
• Vanguard opened its platform to crypto ETFs from rivals like BlackRock and Fidelity for its 50 million clients
• The firm will not launch its own crypto ETFs or advise clients on buying or selling digital assets
• Vanguard maintains crypto is highly speculative and lacks income, compounding, and cash flow for long-term investing
• The platform change follows new CEO Salim Ramji taking over after running BlackRock’s ETF business

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Vanguard Group now allows its 50 million clients to trade spot bitcoin exchange-traded funds on its platform. The move marks a shift for the $12 trillion asset manager that has long opposed cryptocurrency products.

John Ameriks serves as Vanguard’s global head of quantitative equity. He spoke at Bloomberg’s ETFs in Depth conference in New York on Thursday.

Ameriks compared bitcoin to a “digital Labubu” during his presentation. Labubu is a popular collectible plush toy that has gained viral attention recently.

The executive said bitcoin lacks the qualities Vanguard looks for in investments. These include income generation, compounding returns, and steady cash flow.

Bitcoin currently trades around $90,000 after reaching $126,000 in October. Ameriks views the cryptocurrency as speculative rather than a productive long-term asset.

Vanguard opened its brokerage platform to crypto ETFs earlier this month. The firm now provides access to regulated investment vehicles from competitors like BlackRock and Fidelity.

Vanguard Maintains No-Advice Policy on Crypto

The asset manager spent months tracking crypto ETF performance before making this decision. Spot bitcoin funds launched in January 2024 across the industry.

Andrew Kadjeski leads brokerage and investments at Vanguard. He told Bloomberg that crypto ETFs have performed as designed through market volatility while maintaining liquidity.

Vanguard will not advise clients on whether to buy or sell these products. The firm also won’t recommend which crypto tokens to hold.

The company has no plans to launch its own cryptocurrency ETFs. This stance contrasts with competitors who have embraced the space.

BlackRock’s iShares Bitcoin Trust became the fastest ETF to reach $70 billion in assets. The product generates hundreds of millions in annual fees for BlackRock. Bitcoin ETFs have become BlackRock’s top revenue source.

Leadership Change Influences Platform Access

Salim Ramji took over as Vanguard CEO this year. He previously ran BlackRock’s ETF business and oversaw the launch of their bitcoin product IBIT.

Ramji has spoken about blockchain’s potential in public forums. His predecessor Tim Buckley said bitcoin ETFs did not belong in typical retirement accounts.

Vanguard clients complained about restricted access to crypto products before the platform opened. Some threatened to close their accounts in response to the initial blockade.

The firm treats crypto funds as “non-core” assets similar to gold. Vanguard holds approximately $11 trillion in assets under management.

Ameriks said bitcoin might offer value in specific scenarios. These include high inflation periods or times of political instability.

FINRA Foundation data shows 66% of US investors who know about crypto view it as very risky. This figure increased from 58% in 2021.

A Vanguard spokesperson said the firm remains optimistic about blockchain technology. The company believes blockchain can improve market structure despite maintaining skepticism about cryptocurrencies as investments.

Vanguard is the second-largest institutional shareholder in Strategy. Through this holding, the firm has indirect exposure to bitcoin.

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