Vanguard and State Street Steer Clear of Bitcoin ETF Hype
Despite Vanguard and State Street’s decision to abstain, the SEC is approaching a crucial deadline to announce its decision on the first Bitcoin ETF in early January.
The anticipation surrounding the potential approval of spot Bitcoin Exchange-Traded Funds (ETFs) in the United States has reached its zenith. However, amid the frenzy, two major players in the ETF industry, Vanguard Group, and State Street Corp (NYSE: STT), have notably chosen to stay on the sidelines.
While other industry giants like BlackRock Inc (NYSE: BLK) and Grayscale Investments LLC eagerly await regulatory approval, Vanguard, and State Street have taken a firm stance against entering the crypto ETF race.
Vanguard and State Street’s Crypto ETF Position
Vanguard Group, renowned for its predominantly passive, low-cost ETFs, has made its position crystal clear. In a statement, the Valley Forge-based firm said, “Vanguard has no intent to offer a spot Bitcoin ETF or any other crypto-related products. Vanguard believes that the investment case for cryptocurrencies is weak.”
The company argued that, unlike traditional stocks and bonds, most crypto assets lack intrinsic economic value and do not generate cash flows, adding that the high volatility of cryptocurrencies contradicts their goal of helping investors achieve positive real returns over the long term.
On the other hand, State Street, based in Boston and home to the $57 billion SPDR Gold Shares, the largest commodity ETF, has taken a more relaxed stance. While not fervently opposed to the idea of a crypto ETF, the company stated, “We continuously evaluate our lineup of ETFs, but at this time we do not offer a crypto ETF.”
It’s intriguing, considering the firm’s expertise in managing the SPDR Gold Shares, especially given the frequently touted narrative of Bitcoin as “digital gold”.
It is worth noting that this is not the first time that Vanguard and State Street have chosen to remain on the sidelines during a market hype cycle. In 2020, both companies opted out of entering the realm of active, non-transparent ETFs (ANTs), which were initially projected to amass as much as $7 trillion in assets.
The skepticism displayed by Vanguard and State Street appears to have been justified, as three years later, ANTs hold fewer assets than initially predicted.
Anticipation of a Spot Bitcoin ETF
Despite Vanguard and State Street’s decision to abstain, the Securities and Exchange Commission (SEC) is approaching a crucial deadline to announce its decision on the first Bitcoin ETF in early January.
A recent report from Coinspeaker suggests that talks between the SEC and ETF applicants have entered a crucial stage, increasing the chances of a potential approval. Thirteen firms, including BlackRock, Grayscale Investments, ARK Invest, and Invesco, are awaiting the SEC’s decision.
Michael Sonnenshein, the CEO of Grayscale expressed optimism about recent conversations with the SEC. He mentioned that the SEC’s questions signal eagerness to make progress on the issue. Notably, Grayscale achieved a significant legal victory in August when three judges ruled that the SEC must re-evaluate its application for a spot Bitcoin ETF.
While Grayscale and others are optimistic about the SEC’s signals, the agency’s Chair, Gary Gensler, remains a well-known crypto skeptic. The SEC’s decision not to appeal the August ruling may hint at an eventual approval, but the timeline remains uncertain.
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