Vanguard, a prominent asset management firm globally, has acquired a substantial stake in MicroStrategy (MSTR), offering investors an indirect exposure to Bitcoin (BTC).
While Vanguard has chosen not to introduce Bitcoin exchange-traded funds (ETFs) on its platform, its investment in MicroStrategy stock solidifies its presence in the cryptocurrency realm.
As of September 2023, the Vanguard Group held an impressive 1,126 million shares of MicroStrategy, equating to an ownership interest of 8.24%, according to data sourced from Yahoo Finance. This substantial investment positions Vanguard as the second-largest institutional shareholder in the business intelligence company.
What adds intrigue to this investment is MicroStrategy’s strategic diversification of its balance sheet, having accumulated a remarkable 189,150 BTC over recent years, with an approximate value of $5.9 billion. Consequently, some analysts have likened MicroStrategy to an “effectively leveraged Bitcoin ETF.”
Vanguard Bans Customers From Accessing Spot Bitcoin ETFs
In contrast to numerous other asset management firms that have introduced spot Bitcoin ETFs, Vanguard has deliberately chosen to distance itself from the cryptocurrency market.
On January 11th, when a wave of asset managers launched spot Bitcoin ETFs on major Wall Street exchanges, Vanguard took a different approach by blocking the purchase of such products.
Vanguard defended its decision by explaining that these products did not align with its strategic vision. The firm remains dedicated to traditional asset classes like equities, bonds, and cash, which it regards as the foundational components of a well-diversified, long-term investment portfolio.
Nonetheless, despite its official stance on Bitcoin ETFs, Vanguard’s substantial holdings in MicroStrategy signify its underlying indirect exposure to the cryptocurrency market. This indirect exposure implies that Vanguard’s mutual funds, including the Vanguard Total Stock Market Index Fund, Vanguard Small-Cap Index Fund, Vanguard Extended Market Index Fund, and Vanguard Small-Cap Growth Index Fund, may be influenced by the volatile price fluctuations of Bitcoin.
In contrast to Vanguard, UBS, the banking giant based in Zurich, has announced its willingness to allow certain clients to trade Bitcoin ETFs, but with certain conditions attached.
According to an individual with knowledge of UBS’s stance, who requested anonymity, the conditions include the restriction that UBS cannot actively encourage these trades, and accounts with a lower risk tolerance won’t be eligible to purchase them.
Citigroup, on the other hand, has stated, “We currently provide our institutional clients with access to the recently approved Bitcoin ETFs from an execution and asset servicing perspective.” The global bank based in New York is also considering the inclusion of these products for individual wealth clients.
In a historic move, the SEC granted approval to 11 spot Bitcoin ETFs, a significant departure from more than a decade of regulatory resistance. This decision has opened the door for major traditional financial giants like BlackRock, Invesco, and Fidelity to offer direct access to funds that invest in Bitcoin.
On their first day of trading, spot Bitcoin ETFs saw an impressive $4 billion in trading volume, according to data from Yahoo Finance.
