Vanguard has banned Bitcoin ETFs from its platform

The new ETFs on Bitcoin spot are not liked by everyone and Vanguard wanted to make it clear right away.

In fact, yesterday it was discovered that Vanguard has banned them from their platform.

In other words, on the investment platform dedicated to Vanguard clients, the new ETFs on Bitcoin spot are listed, but they are not available for purchase.

Indeed, according to what some users have reported, they have even made GBTC (Grayscale Bitcoin Trust ETF) only sellable. Previously, in fact, GBTC could also be purchased on their platform, but not anymore. 

GBTC is the new Grayscale Bitcoin ETF, listed on NYSE Arca, but previously it already existed as an OTC tradable trust. The shares of the previous OTC tradable trust could be purchased on the Vanguard platform, but those of the new ETF cannot.

Vanguard doesn’t like Bitcoin ETFs

The explanation provided by the company regarding this choice is that Bitcoin does not align with Vanguard’s investment philosophy. 

In reality, it could be a move contrary not only to Bitcoin, but also to BlackRock. 

In fact, The Vanguard Group is the second largest ETF provider after BlackRock’s iShares. It is also generally the second largest asset manager in the world, always behind BlackRock. 

Vanguard, however, has been against Bitcoin for years, probably because it harbors similar doubts to those of Warren Buffett. However, Buffett, for example, has invested in a crypto bank, while Vanguard seems willing to give up on this business. 

Given, however, that among the new Bitcoin ETFs the most prominent one is certainly BlackRock’s (also because the Grayscale Bitcoin Trust has been around for years), it is very likely that it did not want to advertise its main competitor. 

However, it should be added that Vanguard is not the only one to have prevented the purchase of Bitcoin ETFs on its platform, although in other cases it may only be a matter of time. 

Apparently, Vanguard wants to completely oppose the purchase of these BTC derivative financial products by its clients, to the extent that it may even decide never to make it possible.

It should not be forgotten that this year there are elections in the USA, and that the Democratic Party as a whole seems to be against cryptocurrencies. It is possible that Vanguard, with this move, wanted to try to gain support among Democratic investors, or that it wanted to ingratiate itself with Democratic politicians. If, as it seems possible, the Republicans win the elections, it could also decide in the future to reverse the decision. 

Bitcoin ETFs

The fact is that the first day of trading on the new Bitcoin ETFs was sensational and surprising. 

It is very strange that some platforms decide to stay out of this business, especially because they earn commissions on trades. If the trades are many, as in this case, giving up on commissions means giving up on easy earnings. 

However, it should be noted that many of the platforms that have not yet integrated the ability to purchase these ETFs have not done so by choice, but only because integration requires technical time. 

On the stock exchanges on which they are traded, they appeared immediately yesterday, but as for the brokerage platforms, there is probably still a little wait.

Eventually, it is possible that all stock investment platforms will integrate them, except for Vanguard’s. 

Actually, since these ETFs make investments in BTC extremely easy and immediate, it is possible that in the future the buying and selling of Bitcoin ETFs will also be included in the advanced features of all bank current accounts. 

Bitcoin and ETF: the competition between BlackRock and Vanguard

If the largest Bitcoin ETF in the world to date is Grayscale’s (GBTC), with its 620,000 BTC holdings, BlackRock’s is growing rapidly. 

It should not be forgotten that BlackRock is the world’s largest asset manager, and is actively promoting its IBIT (iShares Bitcoin Trust). 

Yesterday, at the time of the launch on Nasdaq, IBIT only owned 228 BTC, with a dollar value slightly above 10 million. 

At the end of the stock exchange trading session, its 400,000 shares had been traded more than 37 million times, so the fund had to issue more.

In fact, it appears that the fund now owns 2,620 BTC, with a dollar value exceeding 120 million. In other words, in just one day, it has more than multiplied its Bitcoin holdings. 

Furthermore, it has an additional $112 million in cash, which it will most likely use today to purchase more BTC. In other words, its AUM has increased by more than twenty times in just the first day of being listed on the stock exchange. 

The total trading volume of IBIT on Nasdaq exceeded one billion dollars on the first day of trading. 

The performance of the Grayscale Bitcoin Trust

As for the Grayscale Bitcoin Trust ETF (GBTC), however, the owned BTC remained unchanged: approximately 619 million, equivalent to about 28.6 billion dollars.

The difference with IBIT is enormous, but GBTC has been around for several years now. Simply put, it used to be a trust with shares only tradable OTC, and now it is an ETF with shares tradable on the New York Stock Exchange. 

Note that yesterday the trading volume of GBTC shares was higher than that of BlackRock’s IBIT.

In fact, on January 11, 2024, GBTC recorded a trading volume of 2.3 billion, which is more than double that of IBIT. However, it should be emphasized that the number of shares is significantly higher, 692 million compared to 400,000.

Yesterday was a great success for GBTC, although it seems possible that over the months BlackRock, through its subsidiary iShares, may nibble away a considerable portion of the market share.