Vanguard Refuses To Join In Offering Bitcoin Spot ETF, Here's Why

JAKARTA Amid the hectic leading asset manager companies are vying to launch a new investment product of Bitcoin ETF and get approval from the US Securities and Exchange Commission (SEC), Vanguard admits that he is not interested in the Bitcoin ETF.

Vanguard is a leading investment management company in the world, refusing to offer Bitcoin spot ETFs to its customers. Bitcoin spot ETFs are exchange-traded funds that have physical Bitcoin as collateral.

Vanguard's decision contradicts the policies of several other investment management companies, such as BlackRock, Ark Investments, and VanEck, which have launched the Bitcoin spot ETF in the United States. Bitcoin spot ETF recently received approval from the US Securities and Exchange Commission (SEC) after waiting for several years.

Vanguard said that the main reason they didn't offer a Bitcoin spot ETF was because of the highly speculative and unregulated nature of the crypto market. The company considers that investing in the crypto market is not in accordance with the long-term investment philosophy they engage in.

"We believe that extreme volatility from cryptocurrencies can reduce the investment value of our customers in the long term. We don't want to expose our customers to unnecessary risks," Vanguard representatives said.

In addition to the Bitcoin spot ETF, Vanguard also does not offer other high-risk investment products, such as leveraged ETFs, which use loans to increase potential profits or losses. Vanguard also doesn't provide custodian services for Bitcoin or other crypto assets.

ETF Bitcoin Spot Alami Disruption

Vanguard's decision not to offer a spot Bitcoin ETF may be quite appropriate given the existence of some of the disruptions that occurred on the first trading day of Bitcoin spot ETF in the US. Some customers complain that they cannot buy or sell Bitcoin spot ETFs through online investment platforms.

One of the problem-chasing Bitcoin spot ETFs is IBIT BlackRock, managed by BlackRock, the world's largest investment management company. Some customers who tried to buy IBIT through the Vanguard platform were told that trading could not be resolved, citing from regulatory restrictions to trade and settlement restrictions.

The same thing also happens on the Fidelity platform, where customers who want to buy IBIT must agree to "Admended Investment Agreement," which states that they are experienced investors with high risk tolerance. However, even after approving the agreement, some customers still cannot buy IBIT.

According to a CNBC report, IBIT managed to raise 904 million US dollars (IDR 14.1 trillion) on its first trading day, making it the largest Bitcoin ETF spot in the US. Other Bitcoin ETF spots, such as VanEck XBTF and BTF Valkyrie, also saw significant inflows.

Despite facing some obstacles, the spot's Bitcoin ETF is expected to encourage crypto adoption among retail and institutional investors. Bitcoin spot ETF provides easier, cheaper, and safe access for investors to invest in Bitcoin, without having to buy, store, or sell Bitcoin directly.

The spot's Bitcoin ETF is also considered as the official recognition of the SEC of Bitcoin as a legitimate investment asset. The SEC previously rejected many applications to launch a spot Bitcoin ETF, arguing that the Bitcoin market is vulnerable to manipulation and fraud.

The SEC finally gave the green light to the spot's Bitcoin ETF in early January 2024. This decision is considered a historic milestone for the crypto industry, which has long awaited more conventional and trusted investment products.