Check out what's happening at FoxBusiness.com
A handful of major Wall Street firms are blocking retail investors' access to new “spot” Bitcoin ETFs, FOX Business has learned.
Vanguard, the world's second-largest asset manager after BlackRock, along with financial advisers Merrill Lynch, Edward Jones and Northwestern Mutual, do not plan to offer their clients access to the 11 exchange-traded funds that the Securities and Exchange Commission has allowed to trade on national exchanges.
The commission's move was seen as a turning point for the $1.8 trillion crypto market, representing a way to introduce masses of retail investors to a product that has so far been reviled by regulators and largely ignored by Wall Street.
SPOT BITCOIN ETFS: HOW TO INVEST AND WHAT IT MEANS
Including Bitcoin in a highly regulated investment vehicle like a spot ETF means that for the first time retail investors can gain access to the world's largest digital asset through their broker-dealers, rather than having to rely on unregulated crypto exchanges. This also means that investors do not have to qualify as accredited investors, which is the criteria for buying into the Bitcoin futures ETF launched in 2021.
WASHINGTON, DC – MARCH 9: Senator JD Vance (R-OH) speaks during a hearing with the Senate Environment and Public Works Committee on Capitol Hill on March 9, 2023 in Washington, DC.
WASHINGTON, DC – DECEMBER 14: (LR) U.S. Treasury Secretary Janet Yellen looks on as Securities and Exchange Commission Chairman Gary Gensler speaks during a meeting of the Financial Stability Oversight Council at the U.S. Treasury Department on Dec. 14 December 2023 speaking in Washington, DC
A representation of Bitcoin can be seen in an illustration image from June 23, 2017.
The attempt to limit access to a new way of investing in cryptocurrencies has resulted in some customers choosing to switch to other financial institutions that offer the investment opportunity.
“I have accumulated $401,000 in savings at Vanguard over 8 years since I was an employee at Google and will be transferring those funds to Fidelity,” Yuga Cohler, a senior technical manager at Coinbase, told FOX Business. “Vanguard’s paternalistic blocking of Bitcoin ETFs does not fit with my investment philosophy.”
Vanguard, a competitor of BlackRock, told a client speaking to FOX Business that the new ETFs did not fit the asset manager's investment philosophy. A Vanguard spokesman did not respond to a request for comment. However, a press representative told The Block, a cryptocurrency-focused publication, that cryptocurrencies are considered highly speculative and unregulated. Offering these assets to its customers “misses the goal of helping investors achieve positive real returns over the long term.”
SPOT BITCOIN ETFS APPROVED BY THE SEC
Internal communications between Merrill Lynch and its clients, seen by FOX Business, said the company's current policy does not permit investments in Bitcoin spot ETFs, although it leaves open the possibility of changing the policy at a later date.
A spokesman for Merrill Lynch did not respond to calls for comment.
Meanwhile, Missouri-based financial services firm Edward Jones has also informed its clients that it is joining the BTC ETF ban, as has Northwestern Mutual.
GET FOX BUSINESS ON THE GO by CLICKING HERE
Representatives for Edward Jones and Northwestern Mutual did not respond to requests for comment.
“It is normal for companies to conduct due diligence on individual ETFs before offering them to their clients, but Vanguard’s stance shows that this may have more to do with the asset itself than the performance of the ETF,” said Dave Weisberger, CEO of CoinRoutes.