Prominent Wall Street firms, such as Vanguard and Edward Jones, issued investment restrictions for their clients after the SEC’s approval of 11 Spot Bitcoin ETFs.
The Spot Bitcoin ETFs commenced trading on January 11, 2024, Thursday, signifying a momentous occurrence in the cryptocurrency industry.
However, prominent Wall Street investment firms are not in good faith with it.
Northwestern Mutual, Vanguard, Merrill Lynch, and Edward Jones have all recently voiced significant opposition to Bitcoin ETFs.
These firms informed their consumers that investing in these assets is prohibited.
Why do Wall Street firms oppose the adoption of Bitcoin ETFs?
FOX Business reports that the previously mentioned firms are denying access to the newly approved Spot BTC ETFs to retail investors.
These financial institutions have decided to withhold exposure to the rapidly expanding crypto market from their clients.
Contrary to the Securities and Exchange Commission’s (SEC) approval of 11 Spot Bitcoin ETFs, this action is taken.
With a current value approaching $2 trillion, the SEC’s decision represented a turning point for the cryptocurrency market.
By incorporating Bitcoin (BTC) into a regulated investment vehicle such as a Spot ETF, broker-dealers grant retail investors access to crypto asset investments.
This obviates the necessity to depend on unregulated cryptocurrency exchanges.
In addition, the accreditation requirement for investors, which was a prerequisite for the Bitcoin futures ETF introduced in 2021, is eliminated.
Some clients have reevaluated financial institutions that support this emerging cryptocurrency investment opportunity in light of the restriction.
Yuga Cohler, Senior Engineering Manager at Coinbase, disclosed his intention to relocate $401,000 in savings from Vanguard to Fidelity in a recent X post.
As per the FOX report, he condemned the strategy employed by the investment firm.
“Vanguard’s paternalistic blocking of Bitcoin ETFs does not fit in with my investment philosophy.” He stated.
Vanguard, a rival of Bitcoin ETF issuer BlackRock, justified its position by asserting that the recently introduced ETFs are incompatible with the investment ideology of the organization.
Furthermore, the organization placed significant emphasis on its dedication to assisting investors in attaining favorable long-term real returns.
As a result, they recognized that the unregulated and speculative nature of the cryptocurrency space would prevent them from reaching their objectives.
Conversely, internal Merrill Lynch and client communications indicate that the firm’s present policy strictly prohibits investments in Spot Bitcoin ETFs.
Nevertheless, a policy shift is a potential occurrence in the future.
As per a post by FOX Journalist Eleanor Terrett on X, Merrill Lynch intends to conduct performance monitoring of the ETFs before reaching a definitive determination.
Are Spot Bitcoin ETFs prohibited?
The strategies of Edward Jones and Northwestern Mutual have been modeled after Vanguard.
Clients have been notified by these firms regarding their choice to comply with the Bitcoin ETF prohibition.
This suggests that the use of Bitcoin ETFs would be prohibited on an institutional level, particularly among the most prominent investment firms on Wall Street.
Despite this, it is impossible to eliminate these ETFs from the United States in light of the SEC’s decision.
Moreover, had the regulatory body contemplated a nationwide prohibition on Bitcoin ETFs, it would not have approved the proposals.
The proposal of the first Bitcoin ETF occurred in 2013, capping a decade-long endeavor to reach that point.
Therefore, should the SEC currently opt to approve the proposals, it will probably adhere to its initial decision.
Furthermore, Dave Weisberger, the CEO of CoinRoutes, weighed in on the decision of Wall Street firms to prohibit investments in Bitcoin ETFs.
It is customary, according to him, for firms to perform due diligence on specific ETFs before recommending them to clients.
Nevertheless, he added, “Vanguard’s attitude shows it may have more to do with the asset itself, than the performance of the ETF.”
