June 13, 2024

Vanguard’s New CEO Means Anti-Bitcoin ETF Stance May Change

On May 14th, Vanguard announced that its Board of Directors appointed Salim Ramji as the company’s new CEO and a member of the board. This marks the first time that Vanguard has hired a CEO from outside of the company. Historically a staunch detractor of bitcoin, Vanguard hiring Ramji has the digital asset space buzzing about the potential for changes at the world’s second largest investment firm (according to assets under management (AUM)).

Who is Salim Ramji?

Salim Ramji has more than 25 years of experience in investments, capital markets, and wealth management. Ramji’s most recent role was Global Head of iShares and Index Investments at BlackRock. He left BlackRock in January to “seek a new leadership or entrepreneurial opportunity outside the firm.” This move came shortly after BlackRock launched their iShares Bitcoin Trust (IBIT), the most popular Bitcoin ETF in terms of growth. Ramji was heavily involved in the launch of IBIT, as he oversaw its filing and logistics. This has many questioning Vanguard’s decision to hire him.

Could This Move Signal That Change May Be Coming at Vanguard?

Almost immediately after 11 spot bitcoin ETFs began trading on January 11th, Vanguard stated:

“Spot bitcoin ETFs will not be available for purchase on the Vanguard platform. We also have no plans to offer Vanguard bitcoin ETFs or other crypto-related products. Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio.”

In the months that followed, Vanguard leadership–including outgoing CEO Tim Buckley–faced criticism from customers and ongoing inquiries about plans for the future. Buckley and Vanguard brass have held firm and maintained that they don’t believe Bitcoin ETFs belong in a long-term portfolio.

With the hiring of Ramji, has Vanguard’s stance changed? As Bloomberg’s senior ETF analyst Eric Balchunas points out, “He [Ramji] has been quoted about his interest in digital assets altho I’m not sure that’s gonna change Vanguard’s stance but hell he will be the CEO. Who knows.. Door much more open now IMO.”

So far, Ramji has reaffirmed Vanguard’s stance on digital assets. In an interview with Barron’s on May 15th, he stated that crypto-related investment products do not fit with Vanguard’s philosophy.

Although there’s doubt that this change coaxes Vanguard into launching their own spot Bitcoin ETF (at least in the near term), Bloomberg ETF analyst James Seyffart states, “I think Salim could reverse Vanguard’s stance on not allowing their clients to buy spot Bitcoin ETFs on their brokerage platform.”

My Take

This cannot be understated: BlackRock and Vanguard are basically arch enemies. They’re the Montagues and Capulets of big finance.

Vanguard hiring a BlackRock guy to run their firm is wild.

I believe this has “we screwed up, and now we need someone who can help us launch a bitcoin ETF ASAP” written all over it.

At a minimum, I believe they’ll start letting clients buy Bitcoin ETFs in the months ahead.

I also wouldn’t be shocked if Vanguard ends up rolling out their version of a bitcoin ETF sometime over the next 12 months, as the late bitcoin hater Vanguard founder John Bogle rolls in his grave.

Ramji will officially become Vanguard’s CEO on July 8th. Stay tuned.

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Alternative investments – such as hedge funds and private equity/venture capital funds – are speculative and involve a high degree of risk. Likewise, the emergence of digital assets comes with its own speculative characteristics and involves a high degree of risk. Various digital assets have unique features, and the regulatory risk environment continues to change as governance requirements, rules, and lawsuits emerge. There may be material differences in the type of marketplaces available for digital assets, and there could be significant restrictions or limitations on withdrawing from or transferring these types of investments. Digital assets may incur higher fees when compared to traditional assets, and these expenses may offset returns.

Crossover Capital may not be able to independently verify digital asset valuations provided by institutions that hold or offer digital asset services. As a result, Crossover Capital will generally rely on information reported to it by third parties. As such, the information contained herein is for informational purposes. Clients should recognize that they may bear digital asset-based fees and expenses at the manager-level, as well as indirect fees, expenses, and performance-based compensation for digital assets. Spot bitcoin exchange-traded products were recently approved for listing and trading by the SEC. However, such approvals do not indicate SEC approval to use or invest in bitcoin. Clients should remain cautious and aware of the various risks associated with digital assets that have a value tied to bitcoin or other crypto related products.

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