Vanguard Reverses Crypto Ban, Opens Trading for BTC, ETH, XRP, and SOL ETFs

$11 trillion asset manager Vanguard has announced that it will allow crypto-focused exchange-traded funds (ETFs) and mutual funds to be traded on its brokerage platform, beginning Tuesday

This is a major reversal by the world’s second-largest investment firm, which has for the longest time opposed crypto assets, despite its arch-rivals BlackRock and Fidelity changing course with the launch of spot Bitcoin and Ether ETFs in 2024. The move could open the door for an influx of retail and institutional capital to the cryptocurrency market.

Vanguard Allows BTC, ETH, XRP, and SOL Investments Following Investor Demand Amid Market Volatility

Bloomberg reported that starting December 2, Vanguard customers can trade regulated investment funds that hold Bitcoin (BTC), Ether (ETH), XRP, and Solana (SOL), putting these leading cryptocurrencies on equal footing as assets such as stocks, bonds, cash, and commodities that the company already handles.

The move gives more than 50 million brokerage customers, who collectively oversee over $11 trillion in capital, exposure to U.S.-listed, regulated crypto investment wrappers.

Vanguard conducted months of internal evaluation before making the policy decision, realizing that client interest in digital assets persisted through sharp market pullbacks. However, customers will be blocked from trading funds tied to memecoins on its platform, while confirming that it will not be launching bespoke digital asset products.

The Wall Street behemoth has spent years resisting crypto exposure, repeatedly framing Bitcoin and other digital assets as speculative. The company even prohibited clients from trading the spot Bitcoin and Ethereum ETFs released by its competitors, BlackRock and Fidelity. 

In August 2024, Vanguard CEO Salim Ramji said the firm had no plans to offer crypto ETFs or mutual funds. Bloomberg reported that Vanguard faced increased pressure from both retail and institutional clients, which prompted the firm to welcome digital asset products into its portfolio.

Speaking to the publication, Andrew Kadjeski, head of brokerage and investments at the company, said that cryptocurrency ETFs and mutual funds have been tested through periods of market volatility, “performing as designed while maintaining liquidity”. He noted that the firm’s administrative processes to service crypto-focused funds have “matured” as investor preferences “continue to evolve”.

Vanguard’s Crypto Pivot Driven by U.S. Policy Shift, Investor Demand, and Ex-BlackRock CEO

Vanguard has been mulling changes to its crypto-product policies since at least September. At the time, Bloomberg senior ETF analyst Eric Balchunas wrote on X that the company has “bent the knee” and is ending its crypto ban. He added that the policy change is a smart decision, considering that bitcoin and ether ETFs are widely popular, and the company’s current CEO is one of the veterans who helped launch BlackRock’s iShares Bitcoin Trust ETF (IBIT).

At BlackRock, Salim oversaw the filing and logistics for IBIT as the head of iShares and index investments. In a Bloomberg interview given shortly after the company first filed to launch a BTC-backed spot ETF in the U.S., he said that the product would offer similar benefits to that of a gold ETF by expanding investors’ access to “new and emerging asset classes”, and BlackRock was “incredibly excited” about cryptocurrencies and their underlying blockchain technology.

iShares Bitcoin Trust is by far the largest among the eleven spot bitcoin ETFs that trade in the United States, holding $70.73 billion worth of BTC as of November 28, according to SoSoValue data. The products have been incredibly successful since their debut almost two years ago, drawing more than $57 billion in net inflows and managing $119.39 billion in total net assets, which represent 6.56% of Bitcoin’s $1.73 trillion market capitalization.

Yet, Vanguard remained unfazed, refusing to list the bitcoin and ether ETFs from Wall Street giants including BlackRock, Fidelity, Franklin Templeton, and VanEck on its trading platform, citing that they were incongruent with its “investment philosophy”.

In July 2024, Salim Ramji was appointed as Vanguard’s CEO, taking over from bitcoin and crypto-skeptic Tim Buckley, who retired after over three decades at the company. Unlike his predecessor, Ramji has been a vocal supporter of cryptocurrencies and blockchain technology.

Analysts were surprised by the company’s decision to hire the former BlackRock executive, as it has historically only promoted people to the CEO position internally.

The sentiment shift can also be attributed to federal policy changes implemented by the Trump administration, with regulators such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) adopting a friendlier stance towards crypto assets. Recently, the SEC updated its generic listing standards to fast-track crypto ETF approvals.

The new guidelines have resulted in a wave of crypto ETFs being rolled out in the U.S., allowing investors to buy shares in funds that track the spot market performance of XRP, SOL, Dogecoin (DOGE), Litecoin (LTC), and Hedera (HBAR), among others. Last week, Balchunas said that he expects over a hundred new crypto ETFs to launch in the next six months. As of October, over 150 ETFs tracking 35 different digital assets are awaiting the SEC’s approval.

Despite Vanguard’s prior negative stance on digital assets, the $10 trillion asset manager is the largest shareholder in Strategy (formerly MicroStrategy), the Bitcoin treasury firm founded by Bitcoin evangelist Michael Saylor. 

Strategy is the largest corporate bitcoin treasury in the world, holding 650,000 BTC ($56.65 billion) as of November 30. Vanguard reportedly owns 20 million shares that represent over 8% of its outstanding Class A common stock, MSTR.

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