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Vanguard Stands Alone as Bitcoin ETFs Gain Traction Among Top Wealth Managers

Last Updated March 7, 2024 11:04 AM
James Morales
Last Updated March 7, 2024 11:04 AM
By James Morales
Verified by Peter Henn

Key Takeaways

  • Some of Wall Street’s largest wealth management firms have started offering spot Bitcoin ETFs to their clients.
  • Most recently, Merryl Lynch and Wells Fargo have listed the new ETFs on their brokerage platforms.
  • However, Vanguard has said it has no plans to let its customers access crypto funds.

When the first spot Bitcoin ETFs were launched in January, several major investment managers opted not to offer them to their customers.

One by one, however, wealth managers have embraced the new investment products. Despite their initial reluctance, even Merryl Lynch and Wells Fargo have listed Bitcoin ETFs on their respective brokerage platforms. Of the largest firms, only Vanguard continues to hold out. 

Wall Street Warms to Bitcoin ETFs

For the average American investor, it is almost impossible to access securities markets without going through a large brokerage firm.

As a general rule, Wall Street firms don’t discriminate against products offered by their competitors. A brokerage account held with Fidelity can be used to invest in funds offered by Vanguard and vice-versa, creating a mutually beneficial system for all. But that doesn’t mean they list every single trust and fund on the market. 

The first brokerages to embrace Bitcoin ETFs were Fidelity, Charles Schwab and JP Morgan. But others initially held off.

However, recent reports suggest  that and Merryl Lynch and Wells Fargo have quietly listed some of the new funds on their trading platforms. But with an important caveat. Only investors who specifically ask for them are being granted access. Meanwhile, financial advisers are prohibited from promoting Bitcoin ETFs to their clients.

Vanguard Has no Plans to Embrace Crypto

Amid rumors that Morgan Stanley is preparing to offer one or more of the new BTC funds to its customers, Vanguard may soon be the only major broker-dealer that doesn’t.

In January, a representative of the firm told CCN: “Spot Bitcoin ETFs will not be available for purchase on the Vanguard platform”. Explaining the company’s rationale, they said: “Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash.” 

Since the company announced  that its CEO Tim Buckley intends to step down at the end of the year, there has been speculation that his successor might take a different stance. For now, however, there is no indication that Vanguard intends to repeal its longstanding opposition to crypto-based investment products.

In a recent blog post , the firm’s global head of ETF Capital Markets Janel Jackson, said: “We do not currently believe that there is an appropriate role for them to play in long-term portfolios.” However, she insisted that Vanguard still had “a lot of interest in blockchain”.

Bridging TradFi and DeFi

Jackson’s comments refer to Vanguard’s ongoing explorations in the field of on-chain asset management and tokenized securities. But her insistence on distinguishing the technology from cryptocurrencies ignores one important fact. That is, decentralized blockchains and their tokens are already becoming integrated with traditional financial markets.

Discussing the matter with CCN, Reid Simon, Head of Credit at Securitize, argued that BlackRock’s Bitcoin ETF represented the first “real crossover” between traditional and decentralized finance.

Thanks to the new ETFs “large TradFi players are now actively participating on chain” he said. But he added that tokenization is also helping to bridge the two worlds.

Simon explained how Securitize’s latest product – Earn – lets people lend Bitcoin and stablecoins against tokenized securities issued by major Wall Street asset managers. 

On the TradFi side, this provides additional liquidity against tokenized assets. Simon said: “At the same time, [Earn is] able to offer higher quality sustainable yields to people in the crypto world.”

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