Vanguard, one of the world’s largest asset management companies with $7.2 trillion in assets under management, came to the fore recently for not providing access to Bitcoin ETFs on its platform. Vanguard’s decision also received reaction from the company’s own customers, and thousands of customers requested to close their accounts. Vanguard continued its Bitcoin ETF ban despite the reactions. Finally, Vanguard managers Janel Jackson and Andrew Kadjeski made a detailed explanation as to why they do not include these products on their platforms.
Statement regarding Vanguard’s Bitcoin ETF decision
Vanguard believes that Bitcoin and other cryptocurrencies are not suitable for long-term investments because these assets are risky due to their volatility, speculative nature and immaturity. Vanguard prefers to offer safer and less risky products to its customers. Jackson said in his statement:
Given the current status of crypto as an asset class, Vanguard has no plans to launch its own Bitcoin ETF or any crypto-related product. When deciding which investment products to offer to our clients, we consider a variety of factors, including whether the relevant assets have lasting investment value and whether they meet our clients’ needs. While interest in Bitcoin and cryptocurrencies in general has increased recently, we do not currently believe they have an appropriate role to play in long-term portfolios.
Additionally, “Vanguard’s view is that crypto is speculation rather than an investment. This is the basis for our decision not to offer crypto products.” said. Apart from this, he made a comparison with stocks. Regarding stocks, he said, “you own shares of a company that produces goods or services, dividends are paid.” He gave similar examples of how bonds and commodities work. However, he argued that cryptocurrencies have little history and have no real value. He also claimed that Bitcoin and altcoins “do not generate cash flow.” As a result, it is a young asset class that will cause losses in the portfolio, he said. He also implied that the demands of his target customers were different.
Customer portfolio difference
The majority of Vanguard’s client portfolio consists of long-term investors. These investors want to earn a stable return and minimize risk. Cryptocurrencies are not considered a suitable asset class for these investors due to their volatility and speculative nature. Kadjeski emphasized how volatile cryptocurrencies can be, drawing attention to Bitcoin’s performance in the last three years. Vanguard’s products and services are designed to help investors save more, trade less and take a long-term approach, not to chase trends and shake up their portfolios, Kadjeski said. In line with this goal, Vanguard chooses not to offer risky investment products such as Bitcoin ETFs.
The situation is different for blockchain
However, the Vanguard executive stated that they have great interest in Blockchain. “We believe that blockchain technology will enable a number of other use cases alongside crypto to make capital markets more efficient. “We have actively conducted research to use this technology.” said. Vanguard’s statement brought about the reaction of investors towards cryptocurrencies. Cryptocurrency advocates argue that Vanguard’s decision is a negative signal for the future of cryptocurrencies. Vanguard’s decision comes at a time when cryptocurrencies are playing an increasingly important role in the investment world.
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