Vanguard holds 20 million shares of Strategy, the top public corporate Bitcoin holder, despite rejecting Bitcoin-based investment products.
Strategy’s stock has climbed alongside Bitcoin, pushing up Vanguard’s fund values and increasing its asset management revenue indirectly.
Vanguard clients cannot buy spot Bitcoin ETFs, highlighting the firm’s consistent avoidance of direct crypto offerings despite market demand.
Vanguard is benefiting from the recent surge in Bitcoin’s value despite maintaining a firm stance against direct involvement in cryptocurrency investments. The financial institution holds nearly 20 million shares in Strategy, the rebranded name of MicroStrategy, which is one of the largest corporate holders of Bitcoin globally.
Strategy’s stock has surged in recent weeks alongside Bitcoin’s rally. Vanguard stands as the top institutional shareholder of the company. This exposure comes not from a deliberate move into cryptocurrency but rather through its passive index investment strategy. Shares of Strategy are included in indices like the Russell 1000, which Vanguard funds track.
Index strategy drives indirect crypto exposure
Vanguard’s investment model focuses on low-cost, passive indexing. As Strategy is part of various major indices, Vanguard funds automatically include these shares. Consequently, when Strategy’s stock rises due to Bitcoin price increases, Vanguard’s assets under management (AUM) grow, resulting in higher management fees and fund valuations.
Despite this exposure, Vanguard continues to reject the idea of offering spot Bitcoin exchange-traded funds (ETFs). The platform does not allow clients to purchase spot Bitcoin ETFs, even as competitors like BlackRock experience success in the sector. Vanguard executives have previously dismissed Bitcoin as lacking economic value and being unsuitable for long-term investors.
Criticism over conflicting positions
The situation has drawn criticism from digital asset advocates. Matthew Sigel of VanEck pointed to the inconsistency, suggesting that Vanguard’s significant stake in Strategy contradicts its public stance. He described the scenario as “institutional dementia,” referencing the contradiction between Vanguard’s disapproval of Bitcoin and its financial benefit from its rising value.
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