Discover Vanguard’s perspective on cryptocurrencies, how they may fit into your portfolio, and key considerations for informed investing.
Cryptocurrencies and Vanguard: What Investors Need to Know
Global recognition and interest of cryptocurrencies stems from the promise of decentralization, technological breakthroughs, economic utility, and speculative allure, combined with institutional endorsement and global regulatory shifts. In January 2024, investors could gain access to spot cryptocurrency exposure through regulated vehicles such as ETFs for the first time, providing access without much of the complexity, cost, or custodial risk associated with direct crypto investing. Today, Vanguard allows trading of select third-party cryptocurrency ETFs and mutual funds through a Vanguard brokerage account—but we do not offer our own crypto products.
Understanding Cryptocurrency
Cryptocurrencies—such as Bitcoin and Ethereum—are a digital (or virtual) means of facilitating online, peer-to-peer transactions. These digital assets are kept on decentralized networks called blockchains (a digital ledger on which records are stored).
Unlike traditional currencies, cryptocurrencies are not issued by governments or central banks. Their value is determined by supply and demand in the open market, which can lead to significant price swings.
How can cryptocurrencies be used?
From an investment perspective, cryptocurrencies are not strictly commodities, asset classes, or currencies, but share characteristics with each. Individuals can use cryptocurrencies to buy goods and services or hold them as investments. Cryptocurrencies can be bought and sold directly or through a wrapper such as an ETF or mutual fund and may be available on platforms such as crypto exchanges, crypto brokerage platforms, crypto kiosks and traditional online brokerages.
Vanguard’s approach to crypto
When it comes to investment products we create, our posture has not changed; we focus on products that generate cash flow in a transparent way, such as interest payments and dividends. At this time, Vanguard has no plans to launch our own cryptocurrency ETFs or mutual funds.
Just as we do with all investment vehicles and asset classes, Vanguard consistently monitors the cryptocurrency space. This ongoing analysis has informed our decision to allow most third-party cryptocurrency ETFs and mutual funds on our brokerage platform. These products have been tested through periods of market volatility, performing as designed while maintaining liquidity; the administrative processes to service these types of funds have matured; and investor preferences continue to evolve.
Our brokerage platform is designed to provide access to a broad range of investment options—including most third-party cryptocurrency ETFs and mutual funds that meet regulatory standards. This approach is consistent with our long-standing policy: for example, gold funds are available on our brokerage platform, but we have never offered a gold ETF.
A suggestion for Investors
Trading in cryptocurrency ETFs and mutual funds may involve significant risk and may not be suitable for all investors. If you’re considering investing in cryptocurrencies or crypto-related funds, we encourage you to:
- Understand the product’s structure and underlying exposure.
- Assess risk tolerance and investment horizon.
- Consider how the product fits within the broader asset allocation.
- Review the fund or ETF’s prospectus and disclosures carefully.