Vanguard’s Bitcoin ETF Censorship Sparks Outrage

2024-01-23, 06:52

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Vanguard blocked investors from buying spot <a href="/zh-tw/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> ETFs.

Several investors have promised to pull out their funds from Vanguard and invest in other asset management firms.

Vanguard’s investment policy is against offering crypto related products.

Keywords: BTC ETF, bitcoin ETF, <a href="/zh-tw/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin price</a>, bitcoin holders, bitcoin exclusion, bitcoin censorship, crypto ETFS, crypto investments, sell bitcoin, <a href="/zh-tw/how-to-buy/bitcoin-btc" target="_blank" class="blog_inner_link">buy Bitcoin</a>, ban spot bitcoin ETF
## Introduction 
The year 2024 started on a high note in terms of crypto developments [following the SEC’s approval of 11 spot bitcoin ETFs on 10 January](https://www.gate.io/blog_detail/3692/daily-news-the-sec-officially-approved-bitcoin-spot-etfs-btc-breaking-through-dollar47000-eth-exceeding-dollar2700-ens-increasing-by-over-30 "following the SEC’s approval of 11 spot bitcoin ETFs on 10 January"). The SEC approved applications for BTC ETF from 11 asset management firms including Fidelity, Invesco , BlackRock and  Ark Investments, setting a stage for an eventful 2024.

Now, the next important stage pertains to how the ETFs will perform on the market and how the traditional exchanges will capitalize on this development. NYSE, Cboe and Nasdaq are some exchanges that are offering the ETFs.

The aim of this article is to analyze the reasons why Vanguard has refused to list the spot bitcoin ETFs and its repercussions on the exchange.

Related news: [These Are the High-Profile Spot Bitcoin ETF Applications](https://www.gate.io/learn/articles/these-are-the-high-profile-spot-bitcoin-etf-applications-currently-in-pllay/1258 "These Are the High-Profile Spot Bitcoin ETF Applications")
## Vanguard Blocks Access To Bitcoin ETFS, Prompting Client Exodus 
Vanguard, one of the leading stock exchanges in the United States, has indicated that it is not willing to offer spot bitcoin exchange traded funds. This came as a surprise for many investors including its long-term customers, since it offers other exchange traded funds related to stocks, indices and bonds.

Vanguard, the second largest asset management firm behind Blackrock, blocked its clients from accessing the newly approved spot bitcoin ETFs. More significantly, the firm has confirmed that it is not willing to list any bitcoin ETF since that does not tally with its investment philosophy.

On Thursday, 11 January, many X and Reddit users confirmed that they are unable to buy any spot bitcoin ETFs using their Vanguard accounts. For example, an x user, Tony Spencer, who contacted the asset management firm concerning spot bitcoin ETF offerings was informed that the company does not offer such products. 
![](https://gimg2.gateimg.com/image/article/17059924291.png)
Source: x.com

Another x user, Matthew Moore, said that the customers who have tried to buy BTC ETFs through their [retirement brokerage accounts got the following message](https://twitter.com/MattMoore23/status/1745477394407031290 "retirement brokerage accounts got the following message"):

“Buy orders are not currently accepted for this security. Securities may be unavailable for purchase at Vanguard due to a number of variables including regulatory restrictions, corporate actions, or various trading and/or settlement limitations.”

TheBlock [reported that](https://www.theblock.co/post/272049/vanguard-wont-offer-spot-bitcoin-etfs-says-high-volatility-is-bad-for-generating-long-term-returns "reported that") Vanguard’s bitcoin censorship is due to the asset’s price volatility. A representative of the firm said that bitcoin is “highly speculative," and "unregulated." As a result of this, it does not fit its investment policy.

Read also: [Bitcoin ETF Approval: Analysts Weigh in on Implications](https://www.gate.io/blog_detail/3707/bitcoin-etf-approval-analysts-weigh-in-on-implications "Bitcoin ETF Approval: Analysts Weigh in on Implications")

As per TheBlock, the [firm’s spokesperson clarified](https://www.theblock.co/post/272049/vanguard-wont-offer-spot-bitcoin-etfs-says-high-volatility-is-bad-for-generating-long-term-returns "firm’s spokesperson clarified") the company’s position. He/she said, "We also have no plans to offer Vanguard Bitcoin ETFs or other crypto-related products – our perspective is long-standing that cryptocurrencies' high volatility runs counter to our goal of helping investors generate positive real returns over the long term.”

Eric Balchunas, a Bloomberg ETF analyst, said that Vanguard’s position on crypto ETFs is not surprising considering that in 2017 its founder, John Bogle, [warned investors](https://www.bloomberg.com/news/articles/2017-11-28/vanguard-founder-jack-bogle-says-avoid-bitcoin-like-the-plague "warned investors") to “avoid Bitcoin like the plague.”
## Market Reaction to Vanguard Bitcoin ETF Exclusion 
In general, the sentiment among many crypto enthusiasts and asset investors is that the unwillingness of traditional investment companies to encompass crypto investments like BTC ETF may make such firms irrelevant to the younger generations that are inclined towards digital assets. Thus, the asset management firms that ban spot bitcoin ETF products may become “obsolete”in the long run.

For a long time till now cryptocurrency enthusiasts and investors have called for the inclusion of crypto assets into the mainstream investment lines. That is why bitcoin holders are [celebrating SEC’s BTC ETF approvals](https://www.gate.io/learn/articles/regarding-bitcoin-spot-etf-5-key-information-that-you-must-pay-attention-to-now/1494 "celebrating SEC’s BTC ETF approvals").

As a result, some bitcoin maximalists and analysts have described Vanguard’s crypto ETF and bitcoin exclusion as a form of market manipulation. Thus, other investors feel that the company is out of touch with reality and the current investment trend, a reason why they are pulling their funds from it.

Other analysts have questioned Vanguard's sincerity and integrity for bitcoin exclusion since it offers some investment products from countries that violate human rights like Saudi Arabia and China.

An x user, Adam Cochran, has shown bitterness towards Vanguard pertaining to its product policy and ethics. He said [on x.com](https://twitter.com/adamscochran/status/1745584935010738644 "on x.com"),

**“Hey Vanguard Group, just so we’re clear, you’re delisting legitimate Bitcoin ETFs because it doesn’t fit “your investment philosophy” But you're fine offering $VWOB which is bonds from China, Saudi Arabia, Qatar and other nations with extensive human rights violations and terrorist financing?”**

He continued, “You as a platform let users choose if that investment is right for them, but now you’re taking some weird moral high ground to overrule user sovereignty and be some pre_script_ive parent?”

Time will tell how the firm will fare due to its policy on digital assets like bitcoin and the related products.
## Vanguard Customer Exodus
Due to Vanguard's stance on crypto ETFs many investors have promised to pull out their investments from the firm and invest in stock exchanges that meet their needs. For example, Yuga Cohler, Coinbase’s senior engineering manager, said that he now intends to convert his Roth 401(k) savings at Vanguard to Fidelity, whose spot bitcoin ETF was approved on 10 January alongside 10 others.

With respect to this, [Cohler said](https://x.com/yugacohler/status/1745544705272648073 "Cohler said"),  “Vanguard’s paternalistic blocking of Bitcoin ETFs does not fit in with my investment philosophy.”

Another crypto investor and bitcoin commentator, Neil Jacobs, also indicated that he will pull his investment from Vanguard. Commenting on X [he said](https://x.com/NeilJacobs/status/1745482313322930221 "he said"), “Terrible business decision by Vanguard.”

Sam Callahan, a lead market analyst at Swan, even advised his followers on how to transfer their funds out of Vanguard. Callahan intends to invest the same funds in Fidelity’s spot bitcoin ETF. He said [on x.com](https://twitter.com/samcallah/status/1745496267830989024 "on x.com"),

**“I have 8 years’ worth of 401K savings at Vanguard from my time as an employee at Google. I will be rolling over these funds to Fidelity.”**

Vanessa Harris, a former Vanguard client, ascertained that she has already moved her funds from the investment firm. In addition to the firm’s unwillingness to offer spot bitcoin ETFs, Harris accuses it of manipulating the price of Bitcoin by only allowing people [to sell GBTC [Grayscale Bitcoin Trust], not buy](https://twitter.com/technologypoet/status/1745491728650424459 "to sell GBTC [Grayscale Bitcoin Trust], not buy").”

Nonetheless, according to Charles Edwards, Capriole Fund founder, Vanguard is not the only investment company that has banned investors to buy bitcoin ETFs. [He confirmed that UBS, Citi, Merrill, “Morgan Stanley and Edward Jones](https://twitter.com/caprioleio/status/1745558882909564933 "He confirmed that UBS, Citi, Merrill, “Morgan Stanley and Edward Jones") did not allow their customers to buy bitcoin ETFs. Therefore, there are several asset management firms that may not allow investors to [buy and sell bitcoin ETFs](https://www.gate.io/learn/articles/what-is-a-bitcoin-etf/218 "buy and sell bitcoin ETFs"). 
## Conclusion
Vanguard’s censorship of spot bitcoin ETFs has created outrage in the crypto sector with many investors threatening to pull out their funds from the firm. Some analysts have accused the firm of manipulating the market and using double standards in its investment policy. For example, it bans the buying and selling of crypto while it offers investment assets from countries with poor human rights records.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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