Vanguard has restricted its customers from purchasing Bitcoin ETFs, including the popular Grayscale Bitcoin ETF (GBTC), and reportedly plans to ban these products from its platform for being too risky.
Vanguard’s decision to ban all Bitcoin ETFs from its platform was first reported by a senior ETF analyst at Bloomberg. The company told customers:
“Currently we aren’t allowing those [GBTC] to be purchased as it doesn’t fit with Vanguard’s investment philosophy.”
Vanguard did not respond to a request for comment as of press time.
No plans to support Bitcoin
Vanguard initially had the option to buy GBTC but stopped supporting the product in 2022. Customers expected the platform to allow investing in Bitcoin ETFs after the SEC approved them for trading on Jan. 10.
However, they were unable to purchase GBTC when trading began on Jan. 11 and were quickly informed that they could only sell GBTC on the platform for now.
Customers initially speculated that the platform was hesitant because it was the ETFs’ first day of trading or “IPO day.” Meanwhile, some argued that this was part of the course as Vanguard has to take these products through compliance procedures before they can allow trading.
However, industry sources claim Vanguard does not plan to add the ETFs to its platform and will maintain the ban on these ETFs in the near future. The company has remained silent on the matter publicly but told customers who complained that it will not allow the purchase of GBTC for now.
This limitation echoes the restrictions imposed by Robinhood on GameStop (GME) trading, which previously led to significant controversy and debate about retail investors’ rights and market fairness.
Industry raises concerns
The reaction on social media has been swift and divided, with critics expressing concerns that such decisions could render traditional investment companies irrelevant to younger investors, who are more inclined towards cryptocurrencies and digital assets.
Once the demographic shifts and generational wealth is transferred to the next generation, companies like Vanguard could become obsolete if they continue to resist emerging investment trends.
Supporters of cryptocurrencies have long championed the inclusion of digital assets like Bitcoin in mainstream investment portfolios. The approval of spot Bitcoin ETFs is seen as a watershed moment for the industry that will lead to increased institutional investment.
Some have viewed Vanguard’s decision to restrict access to these products as a form of market manipulation, while others think the company is deeply out of touch with emerging trends.