Ben Strack

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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I was slightly perplexed by the findings of a new ETF survey that mentions crypto sentiment. Then I read the fine print.



Retail investors are least interested in crypto and ESG ETFs in the next six months, ETF.com’s 2024 global investor survey found. Crypto-related stats in the report, published today, include:



<ul class="wp-block-list">
<li>Between 70% and 80% of investors didn’t have any positions in leveraged, inverse, and cryptocurrency ETFs.</li>



<li>“Only” 10% of advisers increased exposure to crypto over the past six months.</li>



<li>Just 7.4% of investors ranked cryptocurrency as one of the top five sectors they want to invest in over the next six months.</li>
</ul>



Gavin Filmore, chief revenue officer at Tidal Financial Group, is quoted as calling that last finding “a shocker” — citing possible “crypto fatigue” among the “overexposed” younger generation.



Given bitcoin’s latest run, I found this surprising. But then it started to make sense as I scrolled down to the methodology. The more than 600 respondents shared their thoughts between Aug. 15 and Oct. 1.



Of course, a lot has happened since then. Donald Trump and a slew of crypto-friendly Congressional candidates notched wins last week and bitcoin just hit a new high at nearly $90,000.&nbsp;



Then there’s the latest interest in US spot bitcoin ETFs, which tallied $1.1 billion of net inflows on their 10th monthiversary yesterday — making that $3.4 billion in the four trading days since the election).&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Massive $7.22 billion trading day for the US spot <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> ETFs. Highest volume day since March 14. And the 6th highest day of all time. BlackRock&#39;s <a href="https://twitter.com/search?q=%24IBIT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$IBIT</a> lead the way with $4.6 billion followed by Fidelity&#39;s <a href="https://twitter.com/search?q=%24FBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$FBTC</a> also squeaking past the $1 billion level <a href="https://t.co/1ThfMBz2PD">https://t.co/1ThfMBz2PD</a> <a href="https://t.co/erjYvRe9Ph">pic.twitter.com/erjYvRe9Ph</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1856117916363604464?ref_src=twsrc%5Etfw">November 11, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Perhaps ironically, the survey is sponsored by Vanguard — an asset management giant that has said <a href="https://blockworks.co/news/vanguard-opposes-platforming-eth-etfs">crypto doesn’t belong</a> in “a well-balanced, long-term investment portfolio.”



I’m curious to see whether Vanguard’s thoughts about the asset class change in the coming months. And how the answers to similar survey questions shift once post-election sentiment is captured.&nbsp;



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ETF investors lack interest in crypto, report finds?

Anyone paying attention to the launch of spot bitcoin ETFs probably knows how Vanguard feels about such products.



If you thought the financial services giant might view ether differently — or evolve their stance — you can keep thinking.



“While we continuously evaluate our brokerage [offering] and evaluate new product entries to the market, spot ether ETFs will not be available for purchase on the Vanguard platform,” a company spokesperson told Blockworks.&nbsp;



The clarity comes after the Securities and Exchange Commission last week <a href="https://blockworks.co/news/sec-approves-ether-etf-proposals">approved 19b-4 proposals</a> by exchanges looking to list spot ETH funds. The regulator still has to sign off on registration statements from the fund issuers themselves before the planned products can launch — a process industry watchers <a href="https://blockworks.co/news/eth-etf-decision-and-what-comes-next">expect to take several weeks or months</a>.&nbsp;



<a href="https://blockworks.co/tag/vanguard">Vanguard</a>’s stance, for many, reflects a likely unsurprising doubling down.



The company, with roughly $7.7 trillion assets under management, did not allow spot <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETFs</a> to trade on its platform when those hit the market in January. This decision came despite competing brokerages — like Fidelity and Charles Schwab — offering such products.



Read more: <a href="https://blockworks.co/news/vanguard-disallows-bitcoin-etf-trading">As spot bitcoin ETF volumes soar, Vanguard is blocking such trades</a>



“We believe that cryptocurrency products are not aligned with our [offerings] focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio,” the representative reiterated this week.



Vanguard’s steady stance on the segment comes even amid <a href="https://blockworks.co/news/house-passes-act-fit21-with-bipartisan-support">ramped-up bipartisan support</a> of legislation deemed pro-crypto.&nbsp;



<a href="https://blockworks.co/tag/blackrock">BlackRock</a>, one of Vanguard’s chief asset management rivals, offers a bitcoin fund that has grown to nearly $20 billion in assets. Spot ether ETFs are <a href="https://blockworks.co/news/sizing-up-demand-for-us-eth-etfs">not expected to see as much volume or flows</a> as the BTC offerings.&nbsp;



Salim Ramji, who formerly led BlackRock’s ETF business, is set to become Vanguard’s CEO in July.&nbsp;



Read more: <a href="https://blockworks.co/news/vanguard-ceo-blackrock-bitcoin-etf#">Yes, Vanguard’s new CEO supported BlackRock’s bitcoin ETF launch</a>



The executive helped prep the planned spot bitcoin ETF that the SEC would ultimately launch in January.&nbsp;



Though Ramji had <a href="https://x.com/BloombergTV/status/1678499259581100040">touted</a> how such a product offers improved access to a new asset class, he noted in an interview with Barron’s that he would look to keep “consistency” in terms of the types of products and services Vanguard offers.&nbsp;&nbsp;



Ric Edelman, founder of the Digital Assets Council of Financial Professionals, told Blockworks he believes Vanguard will one day launch a bitcoin ETF and offer the products on its platform.



“From a purely business perspective, it’s foolish not to,” he added. “And Salim is not foolish.”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Still a no: Vanguard shoots down prospect of platforming ETH ETFs

Two crypto companies named new CEOs this week. What some would consider an anti-crypto firm did too.



Vijay Chetty replaced Neel Somani as Eclipse Labs’ chief executive, the company <a href="https://x.com/EclipseFND/status/1790939437695996019">said</a> in a Wednesday X post.



Chetty had been the blockchain startup’s chief growth officer for the last year or so. He previously held leadership roles at Uniswap Labs, dYdX Trading and Ripple Labs.



His promotion came after sexual misconduct allegations surfaced against Somani — claims the now-former CEO <a href="https://x.com/neelsalami/status/1788658998411133067">called</a> “false.”



Hack VC, which co-led a $50 million Series A funding round for Eclipse Labs in March, said Somani’s alleged behavior was “unacceptable.”



Read more: <a href="https://blockworks.co/news/eclipse-series-a-funding-mainnet-launch">Eclipse secures $50M ahead of mainnet launch</a>



“Since learning about the allegations, we [have] worked hard with other investors and the team to correct the situation, including urging Neel to resign, and we are pleased to see that happen,” Hack VC added.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We were deeply troubled to learn about the serious allegations made recently against <a href="https://twitter.com/EclipseFND?ref_src=twsrc%5Etfw">@EclipseFND</a> founder Neel Somani. We do not tolerate sexual harassment or misconduct in any form at Hack VC, and we hold our founders and portfolio companies to the same high standards. To be… <a href="https://t.co/2g5P7Bjqq3">https://t.co/2g5P7Bjqq3</a>&mdash; Hack VC (@hack_vc) <a href="https://twitter.com/hack_vc/status/1790942270977675733?ref_src=twsrc%5Etfw">May 16, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



A second CEO development this week is a temporary appointment.&nbsp;



Bitcoin miner Bitfarms on Monday named co-founder Nicolas Bonta the company’s interim president and CEO while an executive search continues. The switch happened the same day that Bitfarms ousted Geoffrey Morphy from the CEO post.



The <a href="https://blockworks.co/tag/mining">mining</a> company had said in March that Morphy would be leaving the role only after his replacement was found. That transition was accelerated after Morphy last week filed a statement of claim against Bitfarms in the Superior Court of Ontario.



Morphy is claiming $27 million worth of damages for alleged breach of contract and wrongful dismissal. Bitfarms said the claims are “without merit,” noting the company “intends to defend itself vigorously.”&nbsp;



A third CEO update came from a company nobody would call crypto-focused.&nbsp;



<a href="https://blockworks.co/tag/vanguard">Vanguard</a>, a fund giant with more than $8 trillion assets under management, named the former head of BlackRock’s ETF business as its incoming CEO. Salim Ramji will fill the role in July, replacing the retiring Tim Buckley.&nbsp;&nbsp;



Why might this be notable from a crypto standpoint?



Well, Ramji helped the world’s largest asset manager launch the iShares Bitcoin Trust (IBIT) — a fund that, in four months on the market, has grown to roughly $18 billion in assets.&nbsp;



BlackRock’s spot bitcoin fund launch reflected an effort to “help investors gain access to parts of the market that otherwise have been more difficult or really expensive or opaque for them to access otherwise,” Ramji said in a July 2023 interview on Bloomberg TV.&nbsp;



Read more: <a href="https://blockworks.co/news/vanguard-ceo-blackrock-bitcoin-etf">Yes, Vanguard’s new CEO supported BlackRock’s bitcoin ETF launch</a>



He now leads a company that has called crypto’s investment case “weak.” <a href="https://blockworks.co/news/vanguard-disallows-bitcoin-etf-trading">Vanguard also does not allow users</a> of its brokerage platform to buy and trade <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETFs</a>.&nbsp;&nbsp;



Some expect the hire could spark a change in Vanguard’s attitude toward the space, even if gradual.



Ramji <a href="https://www.barrons.com/articles/vanguard-salim-ramji-strategy-7283a283?mod=bol-social-tw">signaled</a> in an interview with Barron’s this week that he may not push a change, noting “it’s important for firms to have consistency in terms of what they stand for and the products and services they offer.”



But never say never, as the adage goes.



“Eventually…Vanguard will indeed offer bitcoin ETFs,” Ric Edelman, founder of the Digital Assets Council of Financial Professionals, told Blockworks. “From a purely business perspective, it’s foolish not to. And Salim is not foolish.”



<h2 class="wp-block-heading">Other notable hiring news</h2>



<ul class="wp-block-list">
<li>Jack Melnick, who left Polygon Labs last week, <a href="https://x.com/jackmelnick_/status/1790003409531093413">joined</a> layer-1 Berachain. His title — head of DeFi — remained the same.    </li>



<li>Luc Froehlich, who formerly led the digital assets unit at Fidelity International, is now chief commercial officer of decentralized credit intelligence platform Synnax.</li>



<li>Ava Labs marketing executive Jay Kurahashi-Sofue <a href="https://x.com/jayks/status/1791483711566880986">said</a> Friday he would be leaving the company after four years there. His next role was not immediately clear.  </li>



<li>Noah Levine is set to help lead Visa’s on-chain analytics efforts as a crypto analyst. He was previously a data and analytics lead at RTFKT.</li>



<li>Crypto-focused lawyers Lewis Rinaudo Cohen, Gregory Strong and Sarah Chen joined Cahill Gordon &amp; Reindel as partners of its digital assets and emerging technology practice.</li>
</ul>



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Crypto Hiring: Eclipse Labs names new leader in week of CEO updates

Vanguard has said it doesn’t believe in crypto’s investment case, and it doesn’t allow bitcoin ETFs to trade on its platform.



But the fund giant’s new CEO, Salim Ramji, led BlackRock’s ETF business as the company spurred an industry double-take with its bitcoin ETF filing last year.&nbsp;



So something’s got to give, right?&nbsp;



Maybe not soon, but ultimately yes, according to Ric Edelman, founder of the Digital Assets Council of Financial Professionals (DACFP).



Ramji was <a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s global head of iShares and index investing before leaving the world’s largest asset manager in January. He started his career leading the firm’s corporate strategy and moved on to become its head of US wealth advisory.



Vanguard said Tuesday that Ramji would succeed Tim Buckley as chief executive on July 8. The firm had revealed in February that Buckley was set to retire by the year’s end.&nbsp;&nbsp;



Though Ramji left BlackRock the month that US spot bitcoin ETFs <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">gained Securities and Exchange Commission clearance</a>, he was of course involved in the lead-up.



Fast-forward four months, and BlackRock’s iShares Bitcoin Trust (IBIT) has so far <a href="https://blockworks.co/news/blackrock-bitcoin-etf-inflows-streak">led the category with $15.5 billion of net inflows</a>. IBIT trails the segment’s largest fund — the Grayscale Bitcoin Trust ETF (GBTC) — by less than $1 billion in assets under management.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-etf-performance-first-four-months">Strong start, slowing demand: The first 4 months of US spot bitcoin ETFs </a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



In a July 2023 <a href="https://twitter.com/BloombergTV/status/1678499259581100040">interview</a> on Bloomberg TV, Ramji said the company was “incredibly excited” about blockchain technology given its ability to remove considerable “friction” across the financial ecosystem.



The then-BlackRock executive likened the planned bitcoin product to its physical gold ETF — the iShares Gold Trust (IAU) — launched in 2005.



“The gold is held in custody in a vault, which is remote from us, but it’s now easier to transact in gold using our gold ETFs,” he said at the time. “We’re applying that same philosophy to other new and emerging asset classes like bitcoin, just as we did to gold 20 years ago and just as we did to bonds 20 years ago.”



The <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETF</a> bid was an effort to “help investors gain access to parts of the market that otherwise have been more difficult or really expensive or opaque for them to access otherwise,” Ramji added.&nbsp;&nbsp;&nbsp;



For what it’s worth, Vanguard’s Tuesday news release does not mention IBIT or crypto.



A company spokesperson did not immediately return a request for further comment.&nbsp;



While brokerage firms Fidelity and Charles Schwab, for example, give investors access to trade bitcoin ETFs, Vanguard does not. The company has called the investment case for cryptocurrencies “weak” — noting that most crypto assets “lack intrinsic economic value” and are highly volatile.



Read more: <a href="https://blockworks.co/news/vanguard-disallows-bitcoin-etf-trading">As spot bitcoin ETF volumes soar, Vanguard is blocking such trades</a>



DACFP’s Edelman, who also founded Edelman Financial Services, said he believes Ramji will bring a more “market-focused approach” to Vanguard.&nbsp;



After all, he noted, the company’s focus on being the cheapest doesn’t give it as much of an edge in an increasingly low-cost industry.



“Paternalistic views that prevent investors from owning what they want won’t foster growth either,” Edelman told Blockworks.



Bloomberg Intelligence analyst James Seyffart said in an X <a href="https://twitter.com/JSeyff/status/1790504096195084583">post</a> that he doesn’t think the hire means Vanguard launches a bitcoin ETF in the near-term.



“But I think Salim could reverse Vanguard’s stance on not allowing their clients to buy spot bitcoin ETFs on their brokerage platform,” Seyffart added.



Bitcoin won’t be the first item on Salim’s agenda, Edelman noted.



“But eventually…Vanguard will indeed offer bitcoin ETFs,” he said. “From a purely business perspective, it’s foolish not to. And Salim is not foolish.”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Yes, Vanguard’s new CEO supported BlackRock’s bitcoin ETF launch

As spot bitcoin ETFs continue fighting for assets, some predict another fund issuer could soon enter the arena.&nbsp;



The asset management arm of financial giant Schwab, whose US ETFs manage about $320 billion in assets, is a candidate to launch such a fund, some industry watchers said.



Charles Schwab — alongside Fidelity — currently allows investors to trade spot bitcoin ETFs on its brokerage platform. But while Fidelity also offers its own spot bitcoin ETF, Schwab does not.&nbsp;



Read more: <a href="https://blockworks.co/news/etf-issuers-sidelines-bitcoin-product">Big ETF players remain on the sidelines amid possible milestone bitcoin fund approval</a>



The Fidelity Wise Origin Bitcoin Fund (FBTC) has seen $1.9 billion of inflows since launching on Jan. 11, according to Bloomberg Intelligence <a href="https://twitter.com/JSeyff/status/1751982123660014076">data</a>. That total is second only in the segment to the nearly $2.2 billion of inflows notched by <a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s iShares Bitcoin Trust (IBIT).&nbsp;



Bloomberg Intelligence analyst said in an X <a href="https://twitter.com/EricBalchunas/status/1751242983901450648">post</a> Saturday that the success of rival <a href="https://blockworks.co/tag/fidelity">Fidelity</a>’s FBTC could spur <a href="https://blockworks.co/tag/charles-schwab">Schwab</a> “to file something sooner rather than later.”&nbsp;&nbsp;



“They&#8217;re never first to market in anything but they make [a big] impact when they come in [with a] dirt cheap fee [and] 30 [million] active brokerage [accounts],” Balchunas added.



Nate Geraci, president of The ETF Store, said in a separate X <a href="https://twitter.com/NateGeraci/status/1751082121605628377">post</a> that he agreed with Balchunas — calling Schwab’s potential entrance into the segment a “foregone conclusion.”



Though Schwab <a href="https://blockworks.co/news/first-charles-schwab-crypto-etf-set-to-launch-next-week">launched an ETF that holds crypto-related stocks</a> in 2022, the company has not revealed any plans to launch a spot bitcoin ETF.&nbsp;



A spokesperson for the firm told Blockworks Monday it does not comment on speculation.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



“Schwab Asset Management continues to learn and hear from investors as to their investment needs and considerations for investing in bitcoin <a href="https://blockworks.co/tag/etfs">ETFs</a>,” the representative noted earlier this month. “As is the case with everything we do, if a decision is made by us to offer an ETF in this space, we will seek to deliver on those investment needs with a client focus.”



Read more: <a href="https://blockworks.co/bitcoin-etf">Bitcoin ETF Tracker</a>



The predictions by some segment observers come as State Street’s interest in spot bitcoin ETFs also remains uncertain. Fellow fund giant <a href="https://blockworks.co/tag/vanguard">Vanguard</a> meanwhile has repeatedly made its stance clear that it does not intend to launch a spot bitcoin ETF.&nbsp;



Janel Jackson, global head of ETF capital markets, said in a Jan. 24 Q&amp;A on the firm’s website that “we do not currently believe that there is an appropriate role for them to play in long-term portfolios.”&nbsp;



Vanguard also does not allow investors to buy or sell such funds on its platform.&nbsp;



Read more: <a href="https://blockworks.co/news/vanguard-disallows-bitcoin-etf-trading">As spot bitcoin ETF volumes soar, Vanguard is blocking such trades</a>



Jackson added: “In Vanguard&#8217;s view, crypto is more of a speculation than an investment.”



Ten spot bitcoin ETFs have now traded for more than two weeks after a slate of fund firms gained <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">long-awaited approval from the Securities and Exchange Commission</a>.&nbsp;&nbsp;



Despite Balchunas and Geraci saying they expect Schwab to throw its hat in the spot bitcoin ETF ring, not all believe there will be more coming to market.&nbsp;&nbsp;



Sumit Roy, senior analyst at ETF.com told Blockworks earlier this month that he didn’t expect any other issuers to launch “vanilla” spot bitcoin ETFs in the future. He added at the time: “But I do expect that there will be more creative funds that add other types of exposures on top of just bitcoin.”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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Vanguard reiterates it has no bitcoin ETF plans. But what about Schwab?

Investors using Vanguard’s brokerage platform are not yet able to buy the newly launched slate of US spot bitcoin ETFs.



Rival brokerage firms Fidelity and Charles Schwab, however, are giving investors access to such funds.



Vanguard&#8217;s decision to restrict trading of spot bitcoin ETFs comes as <a href="https://blockworks.co/bitcoin-etf">combined trading volumes</a> for the ETFs approached $3 billion, after just a few hours on the market.&nbsp;



Read more:<a href="https://blockworks.co/news/bitcoin-etf-spot-launch"> Bitcoin ETF starting gate: A look at the spot funds set to start trading today</a>



“While we continuously evaluate our brokerage offer and evaluate new product entries to the market, spot bitcoin ETFs will not be available for purchase on the Vanguard platform,” a spokesperson told Blockworks. “Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio.”



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Some of the world&#8217;s largest financial services companies, such as BlackRock, Fidelity and Invesco, introduced spot bitcoin ETFs on Thursday. In contrast, large ETF players like Vanguard and State Street have never pursued such a fund.



A <a href="https://blockworks.co/tag/vanguard">Vanguard</a> spokesperson told Blockworks earlier this week it had no intent to offer a spot bitcoin ETF or other crypto products.



Read more: <a href="https://blockworks.co/news/etf-issuers-sidelines-bitcoin-product">Big ETF players remain on the sidelines amid possible milestone bitcoin fund approval</a>



“Vanguard believes that the investment case for cryptocurrencies is weak,” the representative added at the time. “Unlike stocks and bonds, most crypto assets lack intrinsic economic value and generate no cash flows. And cryptocurrencies’ high volatility runs counter to our goal of helping investors generate positive real returns over the long term.”



Vanguard’s hesitance to enter the crypto space is not new.&nbsp;



Chief Investment Officer Greg Davis <a href="https://twitter.com/Vanguard_Group/status/1504519429035601925">called</a> crypto “more of a speculative asset class” in May 2022. He added at the time that while the firm finds blockchain technology compelling, crypto “doesn’t fit from an investment perspective.”



Ric Edelman, founder of Edelman financial services, as well as the Digital Assets Council of Financial Professionals, previously told Blockworks he expected approved spot bitcoin ETFs to ultimately see widespread availability of spot bitcoin <a href="https://blockworks.co/tag/etfs">ETFs</a> from most registered investment advisers (RIAs) and brokerage firms.



Read more: <a href="https://blockworks.co/news/bitcoin-etf-trading-volumes-1-billion">Spot bitcoin ETFs surpass $1B in trade volumes after first 30 minutes</a>



He added that wirehouses are likely to be slower to offer such funds, as they often wait for the funds to hit certain assets under management levels. Such firms include Morgan Stanley and Merrill Lynch, for example.



Spokespeople for Morgan Stanley and Merrill Lynch did not immediately return a request for comment.&nbsp;&nbsp;



It is more uncommon for discount brokers catering to retail investors to block access to certain funds, however, Edelman said Tuesday.&nbsp;



Brokerage giant Fidelity, which began <a href="https://blockworks.co/news/s-1-filings-go-live-bitcoin-etfs">offering its own spot bitcoin ETF today</a>, allows the trading of all such funds. Though Charles Schwab has not launched a spot bitcoin ETF, it is allowing investors to trade those products on its platform, a spokesperson confirmed.



Edelman called Vanguard’s latest decision “a paternalistic and objectionable position that interferes with investor choice.”&nbsp;



“This will cost Vanguard credibility, and assets,” he told Blockworks. “They will eventually change their mind — and they’ll be late to the party, to their customers’ regret.”



Casey Wagner contributed reporting.



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As spot bitcoin ETF volumes soar, Vanguard is blocking such trades

The blockchain space is abuzz this week as nearly a dozen issuers gear up to introduce their various spot bitcoin ETFs. However, some of the largest fund groups are notably absent from the fracas, having chosen to remain on the sidelines.



Leading the charge among traditional finance giants is BlackRock, the world’s largest asset manager. BlackRock holds a staggering amount of nearly $2.6 trillion in assets under management in its US ETFs, as reported by VettaFi data. Its proposed entry into the bitcoin ETF space is a monumental move, signaling the blending of decentralized assets with conventional investment strategies.



Invesco, another heavyweight, currently ranking fourth in ETF assets with $450 billion, has also joined the fray. <a href="https://blockworks.co/news/invesco-and-galaxy-team-to-build-suite-of-crypto-etfs">The firm partnered with crypto-focused Galaxy Digital</a> in 2021 and filed its latest spot bitcoin ETF proposal in 2023.



But not all big ETF players have chosen to pursue such a fund.



Vanguard, State Street and Charles Schwab — respectively managing $2.3 trillion, $1.1 trillion, and $315 billion, and ranked among the top five issuers by ETF assets globally — seem to have chosen not to get involved.



“Vanguard has no intent to offer a spot bitcoin ETF or any other crypto-related products,” a spokesperson told Blockworks Tuesday.



“Vanguard believes that the investment case for cryptocurrencies is weak,” the representative added. “Unlike stocks and bonds, most crypto assets lack intrinsic economic value and generate no cash flows. And cryptocurrencies&#8217; high volatility runs counter to our goal of helping investors generate positive real returns over the long term.”



State Street Global Advisors — ranking third in US ETF assets under management — launched the industry’s first ETF, the SPDR S&amp;P 500 ETF (SPY), in 1993. It offers the largest physically-backed ETF focused on gold, an asset bitcoin is sometimes compared to.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Vanguard is Vanguard, so would never expect them to get involved w/ spot bitcoin ETF (they still don’t even have physical gold ETF)… But think State Street might regret sitting this one out… State Street birthed ETFs in US. They have largest gold ETF. Why sit this race out?&mdash; Nate Geraci (@NateGeraci) <a href="https://twitter.com/NateGeraci/status/1742734451212185941?ref_src=twsrc%5Etfw">January 4, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But despite being known as an ETF pioneer, State Street opted not to be one of a dozen or so firms to enter the spot bitcoin ETF race.



“We continuously evaluate our lineup of ETFs, and at this time we do not offer a crypto ETF,” a spokesperson said Tuesday, declining to comment further.



Read more: <a href="https://blockworks.co/news/state-street-sees-significant-opportunity-in-tokenization">State Street Sees ‘Significant Opportunity’ in Tokenization</a>



Sumit Roy, a senior analyst for ETF.com, noted State Street’s standing as the world’s largest custodian and its build-out of digital asset-focused custody solutions.&nbsp;



The firm had roughly $40 trillion in assets under custody and administration, as of Sept. 30. State Street <a href="https://blockworks.co/state-street-launches-digital-finance-unit-for-crypto/">launched its digital finance division</a> in June 2021 and entered into a licensing <a href="https://investors.statestreet.com/investor-news-events/press-releases/news-details/2022/State-Street-to-Develop-Digital-Custody-in-Collaboration-with-Copper.co-03-09-2022/default.aspx#:~:text=State%20Street%20Digital%20will%20leverage,environment%20operated%20by%20State%20Street.">agreement</a> with Copper.co in March 2022 to develop a digital custody offering for institutions.&nbsp;



“It’s possible that the firm is focusing its energy on that part of the ecosystem rather than getting involved in the crowded spot bitcoin ETF race,” Roy told Blockworks. “It&#8217;s hard to imagine that they will launch a spot bitcoin ETF in the future if they haven&#8217;t thrown their hat in the ring already.”



As for Charles Schwab, its asset management division too has not filed for a spot bitcoin ETF.&nbsp;



David Botset, head of equity product management and innovation at Schwab Asset Management, <a href="https://blockworks.co/news/blockchain-etfs-gaining-steam">told Blockworks</a> in January 2022 the company was evaluating “opportunities such as spot cryptocurrency or blockchain technologies in the form of an ETF.” The firm <a href="https://blockworks.co/news/first-charles-schwab-crypto-etf-set-to-launch-next-week">launched an ETF that holds crypto-related stocks</a> later that year.&nbsp; &nbsp;



A Schwab spokesperson on Tuesday declined to comment on future crypto ETF plans.



“I don&#8217;t think anyone else will try to launch a vanilla spot bitcoin ETF in the future, but I do expect that there will be more creative funds that add other types of exposures on top of just bitcoin,” Roy said. “A covered call bitcoin ETF, for instance, is one we are likely to see in the future.”



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Big ETF players remain on the sidelines amid possible milestone bitcoin fund approval

Vanguard&#8217;s ownership of more than half a billion dollars&#8217; worth of stock in bitcoin miners may not mean what you think.



The fund group, which had $7.7 trillion in assets under management as of April 30, now owns roughly 17.9 million shares of Riot Platforms stock, a Monday SEC disclosure indicated.



Vanguard also owns 17.5 million of Marathon Digital, according to a separate filing.



The positions — dated as of June 30 — amount to 10.24% and 10.31% of all issued Riot and Marathon common stock, respectively.



These shares had a combined value of more than $600 million on Wednesday afternoon.



Various media outlet headlines and Twitter posts seem to liken Vanguard’s positions in the bitcoin miners to some sort of direct stake in the companies.



Aniket Ullal, head of ETF research at CFRA Research, said it would be incorrect to equate the large holdings in individual companies to strategic investments made by private equity or venture capital firms.&nbsp;



“I can’t speak to Vanguard’s motivation for its investment in Riot, but their position was procured in the market and not by way of any company-facilitated offering,” Riot CEO Jason Les told Blockworks.



Marathon did not immediately return a request for comment.&nbsp;&nbsp;&nbsp;&nbsp;



<h2 class="wp-block-heading">Ownership via Index funds&nbsp;</h2>



Some may see Vanguard&#8217;s 10%-plus ownership in Riot and Marathon as being bullish on such firms, or the crypto space more broadly — though the company has previously made clear its <a href="https://investor.vanguard.com/investor-resources-education/article/cryptocurrencies-and-vanguard-what-we-think">hesitancy</a> to enter the space.



Ullal noted that fund managers typically invest in publicly listed companies as part of an index-tracking mandate.



“The vast majority of equities managed by Vanguard are in index funds, which do not take a view on any specific stock,” a Vanguard spokesperson told Blockworks in an email. “Rather they simply seek to track the performance of the fund’s target benchmark.”



The representative declined to comment on Riot and Marathon specifically.&nbsp;



Indeed, several Vanguard index funds own Riot Platforms and Marathon.



Of the top 10 mutual funds with the highest ownership of Riot Platforms, as of December 2022, Vanguard ran five of them, according to Yahoo Finance <a href="https://finance.yahoo.com/quote/RIOT/holders/">data</a>.&nbsp;



The Vanguard Total Stock Market Index Fund (VTSAX) and the Vanguard Small-Cap Index Fund (VSMAX) ranked highest, with about 4.6 million and 3.9 million shares of Riot in the funds’ admiral share class, respectively.



VTSAX also held 3.3 million shares of Marathon Digital at the end of December 2022, while VSMAX held nearly 2.9 million Marathon shares at that point.&nbsp;



The primary drivers of trading by index funds are investor cash flows into or out of the fund, corporate actions — such as mergers and acquisitions or secondary offerings — and index rebalances or changes.



Fund managers gain shareholder voting rights for the firms they invest in, Ullal said — adding that BlackRock and Vanguard have started proxy voting programs in which unitholders in their funds can vote on issues raised at company shareholder meetings.



While financial giants such as BlackRock and Fidelity have expressed interest in wading deeper into the crypto space, Vanguard has not expressed any plans to do so.&nbsp;



Chief Investment Officer Greg Davis <a href="https://investor.vanguard.com/investor-resources-education/article/vanguard-view-on-investing-in-cryptocurrency">called</a> crypto “more of a speculative asset class” in May 2022. He added that while the firm finds blockchain technology compelling, crypto “doesn&#8217;t fit from an investment perspective.”&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



Vanguard declined to comment further. 



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Vanguard’s $600 million ‘investment’ in bitcoin miners isn’t what you think

<div id="highlights-block_626ac15bfc93e" class="highlights">
 <ul>
 <li>T. Rowe Price, which services about 6,900 401(k) plans, has not seen demand for crypto investments in retirement plans, according to a spokesperson</li>
 <li>Financial institutions that don’t follow Fidelity’s lead will risk losing customers, crypto executive says</li>
 </ul>
 
</div>



While Fidelity <a href="https://cms.blockworks.co/fidelity-delves-deeper-into-crypto-by-allowing-bitcoin-in-401ks/" target="_blank" rel="noreferrer noopener">revealed Tuesday</a> that it is getting set to allow people to allocate a portion of their retirement savings to bitcoin through the company’s 401(k) platform, competitors aren’t as bullish on the prospect.



The Boston-based financial services company reported growing interest from employers to offer crypto access to employees. But competing 401(k) providers cite a lack of demand and crypto’s speculative nature as reasons for holding off.



Fidelity’s <a href="https://www.fidelityworkplace.com/s/digitalassets" target="_blank" rel="noreferrer noopener">Digital Assets Account</a> offering is expected to be available to the roughly 23,000 employers using the company&#8217;s platform by mid-year. It will allow employees to gain exposure to bitcoin, with a maximum allocation of 20%.



<h3 class="wp-block-heading">Competitors weigh in</h3>



Vanguard has no plans to offer a cryptocurrency option within 401(k) plans, a spokesperson told Blockworks.



The company, which has about 1,400 401(k) plan sponsors, did not comment on whether it could seek to follow Fidelity’s move. Instead, the representative referenced <a href="https://investor.vanguard.com/investor-resources-education/article/cryptocurrencies-and-vanguard-what-we-think">a blog post</a> the company published in September, which calls cryptocurrencies “highly speculative” and notes that their long-term investment case is “weak.”&nbsp;



“As many of our investors know, our investing philosophy encourages staying the course and tuning out the noise,” the blog states. “As cryptocurrencies and blockchain become increasingly mainstream, we’ll continue to monitor their development and discern the best path forward for our investors.”&nbsp;



No companies using Charles Schwab’s 401(k) platform offer crypto investments, said a spokesperson, who declined to comment about whether the firm would consider launching a similar offering to Fidelity. 



Schwab currently serves roughly 1,000 401(k) plans. About 60 percent of its Schwab Retirement Plan Services clients offer a “brokerage window” in their 401(k) plan, which allows individuals to gain access to stocks, mutual funds, ETFs and over-the-counter trust products.&nbsp;



While some of these investment options offer exposure to crypto, assets into such products amounted to less than 1% of total 401(k) brokerage window assets at Schwab, as of Dec. 31, 2021, the representative told Blockworks.



T. Rowe Price, which services about 6,900 401(k) plans, has previously noted “the high level of speculation and lack of regulatory clarity” in the space. The mandates the firm manages for clients today are not well suited for investing directly in digital assets, a spokesperson said.



“None of the defined contribution plans we recordkeep offer cryptocurrency, and we have not seen client demand for that type of investment,” the representative added.



<h3 class="wp-block-heading">Only a matter of time?</h3>



But Bobby Zagotta, CEO of Bitstamp USA, said Fidelity wouldn’t make this move if there wasn’t high demand for crypto.&nbsp;



Bitstamp’s <a href="https://cms.blockworks.co/80-of-institutions-bullish-on-cryptos-future-survey-finds/" target="_blank" rel="noreferrer noopener">latest Crypto Pulse survey</a> found that 80% of institutional investors believe that crypto will overtake traditional investment vehicles within a decade.



“Other financial institutions will have to follow Fidelity’s lead or risk losing customers who increasingly see digital assets as an important part of their retirement planning,” Zagotta told Blockworks.&nbsp;



Nina Tannenbaum, head of business operations at Algorand, said that Fidelity’s move is a key indicator that digital currencies are increasingly being viewed as more than just short-term speculative assets.&nbsp;



“It is also encouraging to see that Fidelity plans on building out their digital asset offerings beyond bitcoin,” Tannenbaum said. “They could consider expanding their offerings to include digital assets that are far more ESG and sustainable-friendly.”



Though Fidelity is the first major financial services company to provide crypto exposure within 401(k)s, ForUsAll <a href="https://cms.blockworks.co/retirement-investment-provider-introduces-alt-401k/" target="_blank" rel="noreferrer noopener">unveiled an offering last year</a>, allowing employers to provide alternative investment options within such plans.



<a href="https://go.forusall.com/growing-businesses-best-401k/?utm_source=adwords&amp;utm_medium=ppc&amp;utm_term=forusall&amp;utm_campaign=Brand_Prospecting_Exact_Core&amp;hsa_cam=10630087387&amp;hsa_mt=e&amp;hsa_ver=3&amp;hsa_src=g&amp;hsa_ad=589076717886&amp;hsa_net=adwords&amp;hsa_tgt=kwd-312639716760&amp;hsa_acc=3390420381&amp;hsa_grp=103738900303&amp;hsa_kw=forusall&amp;gclid=CjwKCAjw9qiTBhBbEiwAp-GE0QA-WwlxltqteXpuGlVbjdHnhG8RJVUiwtZyO8vuRF3dJ5Oxl4rtuhoCWVsQAvD_BwE" target="_blank" rel="noreferrer noopener">ForUsAll</a> CEO Jeff Schulte said crypto access in 401(k)s is “inevitable,” noting that he expects other large institutions to follow Fidelity.&nbsp;



“Not all financial institutions and banks will jump in right away; it will take time,” he said. “But we believe that those who truly listen to their clients&#8217; needs and understand the real investment case for crypto in a well-diversified portfolio — they will be the innovators and among the first to follow Fidelity&#8217;s lead.”



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Will Competitors Follow Fidelity’s Lead in 401(k) Bitcoin Offering?

Casey Wagner

<div id="highlights-block_62050d46d5186" class="highlights">
 <ul>
 <li>Traditional financial institutions are interested in adopting crypto technology, and infrastructure providers are having a hard time keeping up</li>
 <li>Institutions like Vanguard and State Street are already using smart contracts for settlements</li>
 </ul>
 
</div>



According to enterprise technology infrastructure provider Symbiont, Wall Street is already leaning heavily into crypto technology, and the adoption is just beginning.



Symbiont, founded in 2013, launched its first enterprise blockchain product in 2019 with Vanguard. The product allows for smart contracts to take over data normalization for Vanguard’s passive index funds, allowing for orders to be executed autonomously.



<a href="https://www.symbiont.io/" target="_blank" rel="noreferrer noopener">Symbiont</a> currently manages about $2.3 billion of Vanguard&#8217;s passive indices value through that network, Mark Smith, CEO of Symbiont, said.



“We are looking at the technology as a toolkit to solve existing problems,” said Smith.&nbsp;



“From day one, it was really a question of how do we use this technology, in an appropriate way, for regulated entities to use it in a compliant fashion.”&nbsp;



The <a href="https://cms.blockworks.co/?s=infrastructure" target="_blank" rel="noreferrer noopener">infrastructure</a> provider also partners with other big names on Wall Street, including Citigroup, Nasdaq and Franklin Templeton Investments, and hopes for more collaboration opportunities in the future, Smith said.&nbsp;



In its most recent partnership, Symbiont worked with Vanguard and State Street to bring smart contracts to traditional financial transactions.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We&#8217;ve been at the tip of the spear from an enterprise blockchain perspective looking at blockchain smart contract technology as tools to solve real world problems in regulated financial markets,” said Smith.</blockquote>



Vanguard and State Street now use Assembly, Symbiont’s distributed ledger technology, in the margin calculation process for a live trade of a 30-day foreign exchange forward contract.



Vanguard, as a global asset manager, has many international funds, meaning Vanguard must have the available foreign currency on a certain date and time to settle those transactions. To hedge against the risk of the timeframe in which Vanguard needs to settle in a foreign currency, the firm creates forward contracts or swap contracts.



With Assembly, Vanguard and State Street, which act as the bank counterparty, can negotiate the transaction in a secure, encrypted manner through the blockchain, Smith said.



“The smart contract calculates exactly how much collateral you need based on an initial margin calculation that&#8217;s agreed upon amongst the two counterparties,” Smith said. “Historically, each side calculates margin on their own, and then they reconcile on an overnight basis or every two days manually to determine if both sides got the right margin variance calculation.”&nbsp;&nbsp;



Symbiont, and other companies in the infrastructure space, are having a hard time keeping up with growing interest in crypto technology from financial institutions, Smith said.



“Demand has actually outpaced expectation, not just from a Symbiont perspective, but I think if you look at the other market participants, they are all looking to expand,” he said. “Now the question becomes how do those entities onboard and become customers, that&#8217;s the next phase of how enterprise blockchain starts to really take hold in these applications.”



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