Vanguard Group, the second-largest fund management company globally, has faced criticism for refusing to provide cryptocurrency-related product trading services. In a recent Q&A session, Vanguard explained why it does not allow cryptocurrency-related products on its brokerage platform, stating that cryptocurrencies are more speculative than investment and this is the fundamental reason behind the company’s decision not to offer such products.
Vanguard, founded in 1975, is one of the largest fund management companies in the United States, with assets under management reaching $8.1 trillion as of 2022, second only to BlackRock. Vanguard is known for its index investment and counter-cyclical investment style and has issued the world’s first index fund tracking the S&P 500 index.
However, while other companies, including BlackRock, received approval from the U.S. Securities and Exchange Commission (SEC) to list Bitcoin spot ETFs, Vanguard announced that it would not provide Bitcoin spot ETF trading services to its clients. It also stated that it would no longer accept client purchases of cryptocurrency-related products, including Bitcoin futures ETFs, sparking community backlash.
In a Q&A session released on the 24th, Vanguard reiterated that the company has no plans to launch a Vanguard Bitcoin ETF or other cryptocurrency-related products. It also stated that it will not provide cryptocurrency-related products on its brokerage platform. Janel Jackson, Global Head of Vanguard ETF Capital Markets and Broker-Dealer Relationships, and Andrew Kadjeski, Brokerage and Investment Principal at Vanguard, explained the reasons behind this decision.
Regarding why cryptocurrency-related products are not offered on its brokerage platform, Janel Jackson explained that Vanguard sees cryptocurrencies as more speculative than investment, which is the root cause of the company’s decision not to provide cryptocurrency-related products. Andrew Kadjeski added that Morningstar, Inc., recently published an analysis article stating that even with a 5% allocation in a traditional balanced investment portfolio, Bitcoin significantly increases the level of investment risk, largely due to its extreme volatility.
Janel Jackson emphasized that Vanguard is aware that its decision regarding cryptocurrency is unpopular among some investors. However, Vanguard’s philosophy and past practices remain consistent, and its mission is to provide investors with the best opportunities for investment success.