Vanguard, the world’s second-largest fund management company, has come under fire for refusing to provide cryptocurrency-related product trading services. Recently, Vanguard released a Q&A session to explain why it does not allow cryptocurrency-related products on its brokerage platform, stating that cryptocurrencies are more like speculation rather than investment, which is the fundamental reason why the company decided not to offer such products.
Established in 1975, Vanguard is one of the largest fund management companies in the United States, with assets under management reaching $8.1 trillion as of 2022, second only to BlackRock. Vanguard is known for its index investment and contrarian investment style and has issued the world’s first index fund that tracks the S&P 500 index.
However, while other companies, including BlackRock, had their Bitcoin futures ETFs approved for listing by the U.S. Securities and Exchange Commission (SEC) earlier this month, Vanguard announced that it would not provide Bitcoin futures ETF trading services to its clients and would no longer accept client purchases of cryptocurrency products, including Bitcoin futures ETFs, which immediately sparked community backlash.
Vanguard further explained its decision in a Q&A session released on the 24th, reiterating that the company has no plans to launch a Vanguard Bitcoin ETF or other cryptocurrency-related products and will not offer cryptocurrency-related products on its brokerage platform. Janel Jackson, Global Head of Vanguard ETF Capital Markets and Broker-Dealer Relations, and Andrew Kadjeski, Broker-Dealer and Investment Principal of Vanguard, explained the reasons.
Regarding why cryptocurrency-related products are not offered on its brokerage platform, Janel Jackson explained that in Vanguard’s view, cryptocurrencies are more like speculation rather than investment, which is the root cause of the company’s decision not to provide cryptocurrency-related products.
Andrew Kadjeski added that Morningstar, Inc., recently published an analysis article pointing out that in a traditional balanced investment portfolio, even with only a 5% allocation to Bitcoin, it would significantly increase the investment risk level, largely driven by Bitcoin’s extreme volatility.
Janel Jackson emphasized that Vanguard is aware that its decision regarding cryptocurrencies is unpopular among some investors, but it is consistent with Vanguard’s philosophy and past practices. The company’s mission is to provide investors with the best opportunities for investment success.
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