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Vanguard to End Support for Grayscale Bitcoin and Ethereum Products

Starting later this month, Vanguard clients will be unable to purchase GBTC and ETHE.

Vanguard to End Support for Grayscale Bitcoin and Ethereum Products
Shutterstock cover by Dennis Diatel

Key Takeaways

  • Vanguard notified clients today that it would be halting its support for over-the-counter securities.
  • This means that both the Grayscale Bitcoin Trust and the Grayscale Ethereum Trust will no longer be available for purchase.
  • Grayscale has an open application with the SEC to turn the GBTC into a Bitcoin spot ETF.

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Vanguard clients might soon be unable to purchase both the Grayscale Bitcoin Trust and Grayscale Ethereum Trust. This is a consequence of the company halting its over-the-counter securities services, including supporting their purchases and transfers.

GBTC and ETHE Trading Halted

Investors hoping to gain crypto-asset exposure via shares on the stock market will soon face a new obstacle.

Today, clients at Vanguard, an investment advisor in the United States with around $7 trillion in assets under management, were notified that they would no longer be able to purchase and transfer the majority 0f over-the-counter (OTC) securities starting on Apr. 28. Based on the criteria listed in the email, this would include both the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE).

As for the reason for the change, the email included a note on Vanguard’s investment philosophy, which emphasizes a long-term and durable strategy. Hence, the firm will be trimming some of its products and services surrounding over-the-counter securities.

Over-the-counter securities are traded off-exchange. Oftentimes, this is because they do not meet all of the requirements to be listed and traded on an exchange, such as the New York Stock Exchange or Nasdaq. Grayscale’s Bitcoin and Ethereum products are traded over-the-counter and are a popular way for institutions to invest in cryptocurrencies.

Investors with Vanguard who already own GBTC and ETHE will still be able to keep them in their portfolio following the Apr. 28 change.

One reason GBTC and ETHE are commonly used as a vehicle to gain crypto exposure is that there has been no Bitcoin (or Ethereum) spot exchange-traded fund that has been approved by the Securities and Exchange Commission. Grayscale has filed an application with the SEC to transition the GBTC into a spot ETF. Last month, Grayscale’s chief executive officer Michael Sonnenshein mentioned that his firm would consider a lawsuit with the SEC if it did not approve its spot ETF application.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies. 

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