Vanguard Group does not allow its customers to buy the new Bitcoin ETFs: here’s why

Vanguard Group – a $7.7 trillion asset manager, second only to BlackRock – has suspended client access to all newly listed Bitcoin spot ETFs.

The company has ruled out launching its own Bitcoin ETF product, arguing that the asset is not in line with the firm's investment philosophy.

Banks have blocked access to Bitcoin

Several Twitter and Reddit users have confirmed that they are unable to purchase any Bitcoin-backed currency with their Vanguard customer accounts.

Twitter user @notsleepy says he called the firm after failing to buy into Grayscale Bitcoin Trust (GBTC) — a former bitcoin-issuing trust that began trading as a spot ETF on Thursday.

The company told Vanguard that it “does not allow acquisitions because it is inconsistent with Vanguard's investment philosophy.”

While GBTC was previously available for trading, Vanguard now prohibits investors from buying additional shares and only allows them to sell their current holdings.

When attempting to purchase any Bitcoin ETF security through a retirement brokerage account, clients are presented with the following message:

For this security, purchase orders are currently not accepted. Due to various variables, including regulatory restrictions, corporate actions, or various commercial and/or settlement restrictions, securities may not be available for purchase by Vanguard.

I transferred my 401k from Vanguard to Fidelity. It took about 15 minutes.

If you currently have an account with a broker blocking access to #bitcoin ETFs, close it and exit.

Make these boomers hurt

— Julian Fahrer (@Julian__Fahrer) January 11, 2024

Vanguard does not like commodities.

According to The Block, a Vanguard spokesperson said the company has no plans to buy Bitcoin ETFs on the platform, citing their high volatility.

According to Bloomberg ETF analyst Eric Balchunas, Vanguard's rejection of Bitcoin is not surprising. For example, Vanguard founder John Bogle warned investors to “stay away from bitcoin like the plague” in November 2017.

“Bogle didn't like commodities in general,” Balchunas said on Thursday at X Places, stressing that Bitcoin is not a productive asset with cash flow or a coupon attached.

Vanguard has not shied away from Bitcoin-related investments in the past. The asset manager owns a 9% stake in MicroStrategy (MSTR), one of Bitcoin's largest institutional holders.

He also made nine-figure equity investments in Bitcoin mining companies like Riot Platforms and Marathon Digital last year.

Other wealth managers, including Bank of America-owned Merrill Lynch, have banned clients from using Bitcoin ETFs.