Vanguard holds a significant stake in MicroStrategy and is therefore indirectly committed to Bitcoin
2 min readVanguard, one of the world’s leading asset management firms, has secured a significant stake in MicroStrategy (MSTR), providing investors with indirect exposure to Bitcoin (BTC).
While Vanguard has decided against launching Bitcoin exchange-traded funds (ETFs) on its platform, it is positioning itself as a major player in the crypto space by entering MicroStrategy shares.
As of September 2023, Vanguard Group held an impressive 1,126 million shares of MicroStrategy, representing an 8.24% stake, according to Yahoo Finance data .
This significant investment makes Vanguard the business intelligence company’s second-largest institutional shareholder.
What makes this investment particularly interesting, however, is the fact that MicroStrategy has strategically diversified its balance sheet by accumulating a staggering 189,150 BTC, worth approximately $5.9 billion, over the past few years.
As a result, some analysts have described MicroStrategy as “essentially a leveraged Bitcoin ETF.”
Vanguard prohibits customers from accessing Bitcoin spot ETFs
Unlike several other asset managers that have launched spot Bitcoin ETFs, Vanguard has consciously distanced itself from the crypto market.
On January 11, as a number of asset managers launched Bitcoin spot ETFs on major Wall Street exchanges, Vanguard decided to block purchases of such products.
The company justified its decision by saying these products do not align with its vision as it continues to focus on traditional asset classes such as stocks, bonds and cash, which it views as the building blocks of a balanced, long-term investment portfolio.
Despite Vanguard’s official stance on Bitcoin ETFs, Vanguard’s significant holdings in MicroStrategy indicate that the company is indirectly involved in the cryptocurrency market.
Indirect exposure means that Vanguard’s mutual funds, including Vanguard Total Stock Market Index Fund, Vanguard Small-Cap Index Fund, Vanguard Extended Market Index Fund and Vanguard Small-Cap Growth Index Fund, are potentially exposed to the volatile price movements of Bitcoin can be influenced.
Unlike Vanguard, Zurich-based banking giant UBS has said it will allow some customers who want to trade Bitcoin ETFs to do so under certain conditions.
The conditions, according to the person close to UBS, who asked not to be named, include: UBS cannot promote the trade and accounts with a lower risk tolerance will not be able to purchase it.
“Citigroup is currently offering its institutional clients access to the recently approved Bitcoin ETFs, both in terms of execution and asset management,” said a spokesperson.
The New York-based global bank is “evaluating products for individual wealth clients.”
In a historic move, the SEC has approved 11 Bitcoin ETFs, marking a significant departure from more than a decade of regulatory resistance.
The decision has opened the door for major traditional financial giants such as BlackRock, Invesco and Fidelity to provide direct access to funds investing in Bitcoin.
On their first day of trading, Bitcoin ETFs recorded a remarkable trading volume of $4 billion , according to data from Yahoo Finance.
