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.
Anticipation surrounding the possible 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 Crypto ETF Position
Vanguard Group, known for its low-cost, predominantly passive ETFs, has made its position very clear.
In a statement, the Valley Forge-based firm said: “Vanguard does not intend to offer a spot Bitcoin ETF or any other cryptocurrency-related product. Vanguard believes the case for investing in cryptocurrencies is weak.” The firm added that “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.”
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 its goal of helping investors achieve positive long-term real returns.
Boston-based State Street, home to SPDR Gold Shares, the largest commodities ETF worth $57 billion, has taken a more relaxed stance. While not fervently opposed to the idea of a crypto ETF, the company stated: “We continually evaluate our ETF lineup, but at this time we do not offer a crypto ETF.” It’s intriguing, considering the company’s experience managing SPDR Gold Shares, especially given the frequently touted narrative of Bitcoin as “digital gold.”
This isn’t the first time Vanguard and State Street have opted to stay on the sidelines during a market hype cycle. In 2020, both companies opted not to enter the realm of active, non-transparent ETFs, which were initially projected to accumulate up to $7 trillion in assets.
The skepticism shown by Vanguard and State Street appears to have been justified, as three years later, ANTs have fewer assets than initially anticipated.
Anticipating a Bitcoin Spot 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, raising the chances of potential approval.
Thirteen companies, including BlackRock, Grayscale Investments, ARK Invest and Invesco, are awaiting the SEC’s decision. Michael Sonnenshein, CEO of Grayscale, expressed optimism about the recent talks with the SEC. He mentioned that the SEC’s questions indicate enthusiasm for moving forward on the issue. Notably, Grayscale scored a major legal victory in August when three judges ruled that the SEC must reevaluate its application for a spot Bitcoin ETF.
While Grayscale and others are optimistic about the SEC’s signals, the agency’s president, Gary Gensler, remains a known crypto skeptic. The SEC’s decision not to appeal the August ruling may indicate eventual approval, but the timeline remains uncertain.
The SEC will evaluate several factors, including investor protection, market integrity, and compliance with existing regulations, before making a final determination on the Bitcoin ETF.
By Audy Castaneda