Bitcoin Branded a ‘Digital Labubu’ by Vanguard, Yet ETF Trading Doors Swing Open

Vanguard Group, the $12 trillion titan of asset management, has begrudgingly opened its platform to spot Bitcoin exchange-traded funds (ETFs), letting clients trade these products despite labeling Bitcoin a “digital Labubu”—a trendy toy with no real value. This half-hearted embrace, dripping with old-school skepticism, highlights the clash between traditional finance’s disdain and the unstoppable rise of digital assets.

• Policy Pivot: Vanguard now allows trading of spot Bitcoin ETFs after months of sidelines scrutiny since their January 2024 debut.
• Harsh Critique: Bitcoin dubbed a “digital Labubu,” signaling Vanguard’s view of it as a speculative fad.
• Competitive Push: Rivals like BlackRock’s massive ETF inflows force Vanguard to adapt or risk losing clients.

Vanguard’s Bitcoin Jab: A Toy or a Revolution?

Picture this: you’re a Vanguard client managing a tidy portfolio with their $12 trillion fortress, itching to dip into Bitcoin’s wild ride, only to hear it’s nothing more than a shiny collectible. That’s the vibe John Ameriks, Vanguard’s global head of quantitative equity, brought to Bloomberg’s ETFs in Depth conference, dismissing Bitcoin with a cultural gut punch.

“It’s difficult for me to think about Bitcoin as anything more than a digital Labubu.”

For the uninitiated, Labubu refers to a viral plush toy—a cute, hyped-up trinket with value rooted in buzz, not fundamentals. Ameriks’ point is clear: Bitcoin, currently hovering around $90,000 after a tumble from its October peak of $126,000, lacks the income, cash flow, or compounding growth that Vanguard champions in traditional investments. With over 50 million clients worldwide, their philosophy has long been about stability over speculation, and Bitcoin’s rollercoaster chart doesn’t exactly scream “safe bet.”

But calling Bitcoin a mere toy ignores the deeper story. It’s not just a speculative asset; it’s a decentralized network challenging the financial status quo. Let’s unpack why Vanguard’s snub, while grounded in some truth, misses the forest for the trees.

A Reluctant Step: Spot Bitcoin ETFs on the Menu

Despite the shade, Vanguard has cracked open the crypto door. Clients can now trade spot Bitcoin ETFs on their platform—a sharp reversal from their previous lockdown on such products. If you’re new to this, spot Bitcoin ETFs are investment vehicles that directly track Bitcoin’s price by holding the actual cryptocurrency, unlike futures-based ETFs that rely on derivatives. They’re a bridge for traditional investors to gain exposure without wrestling with wallets or exchanges, making crypto more palatable to the suit-and-tie crowd.

Don’t get it twisted, though—Vanguard isn’t rolling out the red carpet. They’ve got zero plans to launch their own crypto ETFs or offer advice on digital assets. It’s a hands-off deal, as Ameriks bluntly put it:

“We allow people to hold and buy these ETFs on our platform if they wish to do so, but they do so with discretion.”

He doubled down, making sure no one mistakes this for an endorsement:

“We’re going to not give them advice as to whether to buy or sell or which crypto tokens they ought to hold. That’s just not something we’re going to do at this point.”

Translation? Play with your digital toys if you must, but don’t cry to us when the market tanks. It’s a begrudging nod to client demand while keeping their pristine reputation clear of crypto’s mud.

Why the Change? Competition and a New Sheriff in Town

So, why budge at all? Two words: competitive pressure. Rivals like BlackRock and Fidelity are cashing in big on crypto ETFs. BlackRock’s iShares Bitcoin Trust (IBIT) skyrocketed to $70 billion in assets faster than any ETF in history, pulling in a diverse crowd from retail dabblers to institutional heavyweights. Fidelity’s offerings aren’t far behind, raking in billions as well. Vanguard clients, stuck watching from the sidelines, weren’t happy—some even threatened to close accounts over the lack of access. For a firm managing trillions, ignoring that kind of heat isn’t an option.

Then there’s the internal shift. Enter Salim Ranji, Vanguard’s new CEO, who took the reins after Tim Buckley, a staunch anti-crypto voice who once barred Bitcoin ETFs from retirement accounts. Ranji, a BlackRock veteran who played a key role in launching IBIT, brings a different flavor. He’s not exactly a Bitcoin maximalist waving the orange flag, but his background in ETFs and openness to blockchain’s potential hints at a slow thaw. Could this signal more crypto-friendly moves down the line, or is this as far as Vanguard will bend? Hard to say, but his influence is already shaking up the old guard.

Skepticism with Stats to Back It Up

Vanguard’s disdain isn’t just hot air—it’s mirrored by a growing chunk of the public. Data from the FINRA Foundation shows 66% of US investors aware of crypto see it as extremely or very risky, up from 58% in 2021. That’s a hefty jump, and Bitcoin’s price swings don’t help. Dropping $36,000 in a matter of weeks doesn’t scream “store of value” to a risk-averse crowd, and Vanguard’s built its empire on catering to exactly that demographic.

Even their indirect ties to crypto—being the second-largest institutional shareholder in Strategy, a company with Bitcoin exposure—feel more like an accidental overlap than a deliberate bet on digital gold. But Vanguard isn’t completely shutting the door on future possibilities. Ameriks teased a scenario where Bitcoin could make sense:

“If you can see reliable movement in the price in those circumstances, we can talk more sensibly about what the investment thesis might be and what role it could play in a portfolio. But you just don’t have that yet—you’ve still got too short of a history.”

He’s pointing to extreme conditions—think hyperinflation or political chaos—where Bitcoin might shine as a hedge. Fair enough, but with 15 years of history under its belt, calling Bitcoin’s track record “too short” feels like a cop-out. Tell that to MicroStrategy, sitting on billions in Bitcoin gains while Vanguard plays catch-up.

On a brighter note for tech enthusiasts, Vanguard does tip its hat to blockchain itself. They see it as a way to make financial systems faster and cheaper by cutting out middlemen, separate from the speculative circus of tokens. Andrew Kadjeski, head of brokerage and investments, even acknowledged crypto ETFs’ resilience:

“Cryptocurrency ETFs and mutual funds have been tested through periods of market volatility, performing as designed while maintaining liquidity.”

A small win, but don’t expect them to start shilling decentralized finance (DeFi) protocols anytime soon.

Bitcoin’s Real Value: Beyond Vanguard’s Blind Spot

Here’s where Vanguard’s “digital Labubu” jab falls flat. Bitcoin isn’t just a speculative gamble—it’s a tool with real-world impact, especially for those the traditional system screws over. Take remittances: migrant workers bleed 7% or more in fees sending money home through Western Union or banks. Bitcoin slashes that to near-zero on networks like Lightning, getting cash to families faster and fuller. Then there’s censorship resistance. Activists in oppressive regimes—from Venezuela to Belarus—use Bitcoin to fund movements when banks and governments freeze their accounts. That’s not a toy; that’s a lifeline.

Don’t forget inflation hedging. In places like Argentina or Zimbabwe, where fiat currency loses value faster than you can spend it—known as fiat debasement—Bitcoin’s fixed supply of 21 million coins offers a rare escape. Sure, its volatility is a beast, but when your local peso or dollar is cratering 50% a year, a bumpy ride on Bitcoin looks like a luxury problem. Vanguard’s focus on “no cash flow” ignores these use cases where Bitcoin isn’t about yield—it’s about survival and freedom.

Even in stable economies, Bitcoin’s ethos as the hardest money ever built resonates. It’s not owned by any government or corporation, mined through a decentralized network of computers solving complex math to secure transactions. That’s a middle finger to centralized control, something a $12 trillion giant might not vibe with, but millions of users do. Dismissing that as a fad reeks of willful ignorance, as pointed out in a recent critique of Vanguard’s dismissive stance on Bitcoin.

TradFi vs. Crypto: A Tug of War with No Clear Winner

Zooming out, Vanguard’s move mirrors the broader dance between traditional finance and crypto. Spot Bitcoin ETFs, unleashed in January 2024, have been a game-changer, pulling in investors who’d never touch a hardware wallet. BlackRock’s $70 billion haul proves this isn’t niche—it’s a tidal wave of mainstream adoption. Other heavyweights like Morgan Stanley and Goldman Sachs are dipping toes into crypto services, offering custody or advisory roles, showing the industry isn’t waiting for Vanguard’s blessing.

Yet, for every bullish milestone, there’s a sobering reality check. Bitcoin’s volatility can wipe out gains in days, and the broader crypto space is still plagued by meme coin scams and pump-and-dump schemes. Vanguard’s not wrong to call out the Wild West vibe—but pinning that on Bitcoin itself is lazy. The garbage altcoin casino isn’t Bitcoin’s fault; it’s a symptom of unchecked hype we’ve got no patience for here. Bitcoin stands apart as a decentralized bedrock, even if its price action gives heartburn.

Vanguard’s half-measure—allowing ETF trades while sneering from the sidelines—captures this tension perfectly. They’re caught between client demand and their own risk-averse DNA. Meanwhile, competitors are eating their lunch. Will relentless pressure force a fuller embrace of crypto, or will the next inevitable market crash vindicate their caution? And more importantly, will TradFi gatekeepers ever grasp that Bitcoin isn’t just another asset—it’s a rebellion against their very system?

Key Takeaways and Burning Questions

• Why did Vanguard allow Bitcoin ETF trading despite their contempt?
  Rivals like BlackRock, with $70 billion in IBIT assets, and frustrated clients pushed Vanguard to relent, alongside a blockchain-curious CEO, Salim Ranji, though they still refuse to endorse crypto.
• What’s behind the ‘digital Labubu’ label, and why does it sting?
  It reveals traditional finance’s bias, casting Bitcoin as a worthless fad while ignoring its power as decentralized money—a shortsighted jab from a $12 trillion dinosaur blind to financial freedom.
• Does Vanguard have a point about Bitcoin’s risks and lack of fundamentals?
  Partly—volatility is real, and Bitcoin offers no dividends or yield. But dismissing its role in remittances, censorship resistance, and inflation hedging shows a massive gap in understanding.
• How do spot Bitcoin ETFs fuel mainstream crypto adoption?
  They let traditional investors tap Bitcoin’s price without owning it directly, skipping the tech hassle. This bridges TradFi and crypto, though Vanguard’s lukewarm stance dulls the impact.
• Can blockchain win over skeptics like Vanguard without crypto’s baggage?
  Vanguard praises blockchain’s efficiency for markets, but separating it from Bitcoin’s incentivized network is naive—Bitcoin’s value often drives the tech’s real-world punch.
• Will Vanguard ever go all-in on Bitcoin, or is this their limit?
  Client demand and rival moves might nudge them further, but a brutal crypto crash could lock in their doubts. For now, they’re just holding the door ajar while rolling their eyes.