Vanguard's decision to not give its users access to Bitcoin ETFs sparked a backlash among some clients, who decided to close their brokerage accounts and move their funds to other platforms.
Vanguard users found themselves unable to buy shares in spot bitcoin ETFs, which began trading Thursday after the U.S. Securities and Exchange Commission gave the green light to nearly a dozen bitcoin ETFs for the first time on Wednesday.
The investment manager's stance on cryptocurrencies has frustrated some cryptocurrency advocates with Vanguard accounts — leading them to instead take their business to the company's more cryptocurrency-friendly competitors.
Julian Fuhrer, co-founder and CEO of Apollo, a review platform for bitcoin-related products, said on X, previously Twitter, that he had requested to move his 401(k) account from Vanguard to Fidelity.
“It took about 15 minutes,” Fahrer said chirp.
In an interview with MarketWatch, Fahrer said Vanguard sent him an email indicating that his order was still being processed and could take one to two business days to complete. MarketWatch reviewed screenshots of the exchange shared by Fahrer, who declined to disclose how much money he had in his Vanguard account.
Fuhrer said he chose to withdraw his funds from Vanguard not because he had any problems using the platform, but rather because he was frustrated with its decision not to allow trading of Bitcoin exchange-traded funds.
He told MarketWatch that he moved his account to Fidelity, to support the company's embrace of cryptocurrencies. Fidelity is among the investment managers to launch a spot Bitcoin ETF this week — the Fidelity Wise Origin Bitcoin Fund FBTC — and is also allowing such products to be traded via its brokerage arm.
Faher said he made his post on X mostly “to send a message, a rallying cry for other people who feel the same way and really connect that it's really easy to do.”
“If you also believe that responsible asset management is done by institutions that understand the value of Bitcoin and the role it will play in the future, then it makes sense to give your business to them,” Fuhrer said.
Cryptocurrency enthusiasts have expressed similar sentiments about X.
In an email to MarketWatch on Thursday, a Vanguard spokesperson reiterated the company's decision to block spot bitcoin ETF trading on its platform. “While we continually evaluate our brokerage offering and evaluate new product entries to the market, spot Bitcoin ETFs will not be available for purchase on the Vanguard platform,” they wrote.
The spokesperson added: “Our view is that these products are inconsistent with our offering that focuses on asset classes such as stocks, bonds and cash, which Vanguard views as the building blocks of a balanced, long-term investment portfolio.” Noting that Vanguard has no plans to sponsor any bitcoin ETFs or other cryptocurrency-related products in the future.
Frank Korva, chief digital asset analyst at comparison site Finder.com, said that since investor interest in bitcoin ETFs appears high, financial institutions that do not provide access to trading such products may suffer from user outflows.
“Financial institutions that ignore Bitcoin and deny their clients access to the asset will likely be penalized in the form of their clients moving their funds to institutions that accommodate their desire for exposure to Bitcoin,” Korva wrote in email comments.
