Vanguard Raises White Flag Over Crypto ETFs

For having a name that means leading actions, movements and the development of new ideas, Vanguard has been curiously behind the industry in giving its clients access to crypto ETFs.

That was the case until yesterday, when the low-cost, investor-focused financial giant made a big change, allowing some of the more mainstream (meaning not memecoin) digital-asset exchange-traded funds onto its brokerage system. That followed a decision by Morgan Stanley in October to expand crypto access to all clients, rather than limiting it to those with high risk tolerance and at least $1.5 million, as it previously had. And Vanguard’s change coincides with a move by Bank of America to recommend allocations of 1% to 4% of wealth management clients’ assets to Bitcoin ETFs.

“Vanguard is the latest TradFi firm to do an about-face on crypto,” said Ric Edelman, founder of the Digital Assets Council of Financial Professionals, crediting CEO Salim Ramji, who has been at the helm since mid-2024, with the development. “It’s impossible to view this as anything other than highly bullish for Bitcoin and other major digital assets.”

Turning from a Stern Position

Vanguard acknowledged the already high and growing demand for Bitcoin ETFs and other crypto assets, in a note to investors. The company didn’t publicize the change in the ways it would for a fund launch, new model portfolios or retirement data report. But it stated clearly on its site that its more than 50 million investor clients should approach crypto with caution. “These products have been tested through periods of market volatility, performing as designed while maintaining liquidity; the administrative processes to service these types of funds have matured; and investor preferences continue to evolve,” the company stated. The funds are available in brokerage accounts, meaning that defined-contribution plan participants don’t have access outside of brokerage windows, a spokesperson told ETF Upside.

There’s plenty for people to be excited (or worried) about:

• Crypto is notoriously volatile. Bitcoin prices fell from a high of over $124,000 in October to just over $84,000 in November, since rebounding to about $92,000. 
• Even as the biggest fund, the iShares Bitcoin Trust ETF (IBIT) fell from nearly $100 billion in assets under management to $66 billion, the product is reportedly the biggest revenue driver for BlackRock.
• Famed investor Michael Burry this week said crypto is essentially worthless, comparing Bitcoin’s rise to the Dutch tulip bubble in the 1600s.

Righting the Ship? Edelman cast Vanguard’s until-now ban on crypto as a mistake. But in fixing the alleged mistake, the company is doing so at an opportune time, he said. “By making Bitcoin, Ethereum, Solana and other crypto ETFs available to its 50 million customers, Vanguard is letting them buy while crypto prices are 30% below their all-time highs,” he said. “Vanguard customers who take advantage of the sudden availability will find themselves sitting on nice profits in the future.”
Still, it’s not necessarily right for everyone. “Crypto access is all well and good. But access is not an investment plan,” Jeff DeMaso, editor of the Independent Vanguard Adviser, said in a note to investors. “For most investors, owning little, or none, is perfectly acceptable.”