January 12, 2024

Bitcoin ETF Access Denied by Vanguard and Merrill Lynch, Prompting Investor Exodus

Despite the regulatory success in approving bitcoin for trading through ETFs, Vanguard and Merrill Lynch have chosen not to offer exposure to the cryptocurrency through these investment vehicles, prompting a significant backlash from clients.

While bitcoin gains regulatory approval for trading on major US exchanges through bitcoin ETFs offered by leading asset managers, Vanguard and Merrill Lynch, two prominent institutions, stand firm in denying their customers access to these newly approved investment products. This has led investors to withdraw funds and seek alternative platforms, highlighting a divide within the asset management industry regarding the acceptance of digital assets.

Vanguard, one of the world's largest asset managers, expressed its stance even before regulatory approval, stating that it has no plans to offer a spot bitcoin ETF or any other crypto-related products. The firm cited a "weak" investment case for digital assets, emphasizing the lack of intrinsic economic value and cash flows in most cryptocurrencies compared to traditional stocks and bonds.

This decision contrasts with other major asset management firms such as BlackRock and Fidelity, which have already launched their spot bitcoin ETFs, signaling a divergence in opinions within the industry.

Following suit, Merrill Lynch, owned by Bank of America, has also chosen not to grant its customers access to spot BTC ETFs. The company is reportedly evaluating the efficiency of these ETFs before considering any changes to its current policy that prohibits such products. Investors eager to invest in bitcoin through these ETFs have expressed concern over this denial of access.

Reacting to Vanguard's and Merrill Lynch's decisions, disgruntled users have reported transferring significant amounts of money from Vanguard to Fidelity, a bitcoin ETF issuer. They are actively encouraging other investors to join this protest to gain exposure to the recently approved bitcoin ETFs.

The denial of access to bitcoin ETFs by these major institutions underscores the differing perspectives within the asset management industry regarding the acceptance and adoption of digital assets. While some firms recognize the potential of cryptocurrencies and have launched their own bitcoin ETFs, others remain skeptical.

This denial is expected to drive investors toward asset managers that allow investments in these newly approved products. As the market reacts to this development, investors and industry observers will closely monitor the performance of bitcoin ETFs and their potential impact on the overall cryptocurrency market.

The response of these asset management giants to the investor backlash and the performance of the ETFs remains uncertain, leaving open the possibility of a reconsideration of their stance if the ETFs meet expectations.

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