Vanguard breaks tradition with new access to crypto ETFs

The world’s second-largest asset manager, Vanguard Group, has decided to broaden its scope in the crypto industry. It is now reportedly permitting the trade of mutual funds and ETFs that primarily invest in cryptocurrencies on its platform. This change in stance illustrates a substantial shift from their previous beliefs.

Following this announcement, the asset manager clarified that it would grant its users the opportunity to trade ETFs and mutual funds that focus on specific cryptocurrencies, including Bitcoin, Ether, XRP, and Solana, starting Tuesday.

Several crypto firms shift their focus towards ETF trading 

Vanguard’s recent decision to allow trading of ETFs and mutual funds demonstrates a significant shift for a firm that once expressed its belief that digital assets were highly volatile and posed substantial risks to major investment portfolios. Notably, this shift in stance was adopted despite the cryptocurrency market experiencing a loss of more than $1 trillion in value since early October. 

This move drew the attention of reporters, who reached out to the asset manager in an attempt to uncover the main motivators behind this decision. Responding to a request for comment, Vanguard mentioned that the surging demand from both individual and institutional investors led them to embrace the move. 

To support this claim, analysts weighed in on Vanguard’s comment, noting that since the introduction of spot Bitcoin ETFs in January 2024, these ETFs have managed to capture billions in investments.

On the other hand, reports from reliable sources indicate that the asset manager’s decision aligns with the current industry trend. This finding was drawn after it was discovered that its competitors are now allowing the trade of ETFs on their platforms. 

An example is BlackRock, Vanguard’s main rival. BlackRock was reported to still hold about $70 billion in its IBIT ETF despite some withdrawal cases and a decline in the price of BTC. However, this number reflects a decline from approximately $100 billion held just two months ago.

Meanwhile, sources acknowledged that Vanguard’s new approach makes regulated crypto investments available to over 50 million brokerage clients, who collectively manage more than $11 trillion in assets. 

It is worth noting that crypto-linked ETFs are considered one of the quickly expanding fields in the history of US funds. Crypto analysts also highlighted that cryptocurrency supporters may view Vanguard’s decision as an indication that traditional finance cannot ignore the influence of digital assets. 

As the topic of discussion sparked heated debates among individuals, Andrew Kadjeski, who leads brokerage and investments at Vanguard, decided to weigh in on the situation. Kadjeski stated that a test was conducted on cryptocurrency ETFs and mutual funds during market fluctuations. According to him, the results showed that they function as intended, while investors found it easy to purchase or sell them.

“The way we manage these funds has improved over time, and what investors want keeps changing,” Kadjeski added.

Vanguard vows to support most crypto ETFs and mutual funds

Vanguard has shifted its focus towards mutual funds and ETFs trading over a year after Salim Ramji assumed the role of the asset manager’s CEO. Notably, Ramji is a former executive at BlackRock and a strong supporter of blockchain technology.

Following his pro-crypto stance, Vanguard recently made public its intention to back most crypto ETFs and mutual funds that strictly adhere to regulatory rules set. This strategy will take place similarly to how the company manages other asset types, such as gold.

However, reports noted that Vanguard has no plans to introduce its own digital assets in the near future. Additionally, it will still exclude funds connected to memecoins, as defined by the US Securities and Exchange Commission.

“Even though Vanguard doesn’t plan to create its own crypto products, we serve millions of investors with different needs and risk levels. We aim to offer a trading platform that allows our clients to invest in the products they choose,” Kadjeski added. 

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