April 13, 2024
Crypto

Some Vanguard users blocked from bitcoin ETFs are transferring their funds


Vanguard’s decision to not offer its users access to bitcoin ETFs has sparked a backlash among some customers, who have decided to close their brokerage accounts and move their money to other platforms.

Vanguard users have found themselves unable to buy shares in spot bitcoin ETFs, which started trading on Thursday after the U.S. Securities and Exchange Commission greenlighted nearly a dozen bitcoin ETFs for the first time on Wednesday.

The investment manager’s stance on crypto has frustrated some crypto advocates with Vanguard accounts — leading them to take their business instead to the firm’s more crypto-friendly competitors.

Julian Fahrer, co-founder and chief executive at Apollo, a review platform for bitcoin-related products, said on X, formerly Twitter, that he requested to transfer his 401(k) account from Vanguard to Fidelity.

“It took about 15 minutes,” Fahrer tweeted.

In an interview with MarketWatch, Fahrer said Vanguard emailed him back noting that his request was still being processed and may take one to two business days to complete. MarketWatch has reviewed screenshots of the exchange shared by Fahrer, who declined to disclose how much money he had in his Vanguard account.

Fahrer said he chose to withdraw his funds from Vanguard not because he has any problems using the platform, but rather because of his frustration with its decision to not allow trading of bitcoin ETFs. 

He told MarketWatch that he transferred his account to Fidelity, in support of the company’s embrace of crypto. Fidelity is among the investment-management firms that launched a spot bitcoin ETF this week — the Fidelity Wise Origin Bitcoin Fund FBTC — and also allows trading of such products via its brokerage arm.

Fahrer said he published his post on X to mostly “send a message, a rallying call for other people who feel the same way and really communicate that it’s really easy to do.”

“If you likewise think that responsible management of assets is done by institutions who recognize the value of bitcoin and the role that it’s going to play in the future, then it only makes sense to give your business to them,” Fahrer said.

Oher crypto enthusiasts expressed similar feelings on X.

In an email to MarketWatch on Thursday, a Vanguard spokesperson reiterated the firm’s decision to withhold trading of spot bitcoin ETFs on its platform. “While we continuously evaluate our brokerage offer and evaluate new product entries to the market, spot bitcoin ETFs will not be available for purchase on the Vanguard platform,” they wrote.

“Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio,” the spokesperson added, noting that Vanguard has no plans to sponsor any bitcoin ETFs or other crypto-related products in the future.

As investor interest in bitcoin ETFs appear to be high, financial institutions that don’t offer access to the trading of such products may suffer from user outflows, said Frank Corva, senior analyst for digital assets at comparison website Finder.com.

“Financial institutions that ignore bitcoin and hinder their clients from getting access to the asset will likely be punished in the form of their clients moving their money to institutions that accommodate their desire to get exposure to bitcoin,” Corva wrote in emailed comments.





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