Wall Street giants are inconsistent? Vanguard allows Bitcoin ETF trading but calls it a "digital Labubu"

Asset management giant Vanguard, which oversees $12 trillion in assets, has made a strategic adjustment under client pressure and market trends: its platform now allows trading of spot Bitcoin ETFs. However, company executives’ assessment of the investment value of cryptocurrencies remains unchanged. John Ameriks, head of global quantitative equities, publicly compared Bitcoin to the popular plush toy “Labubu,” emphasizing its lack of cash flow and intrinsic yield properties, and still regards it as a speculative collectible. This contradictory stance—“body honest, mouth denying”—reveals the complex mindset and cautious steps of traditional financial giants facing the wave of crypto assets.

The “Body Honest” of Traditional Asset Management: Why Did Vanguard Finally Open the Trading Channel?

Despite internal doubts, facing client demand and the tremendous success of competitors, asset management giant Vanguard ultimately made a pragmatic choice. In October this year, with the appointment of new CEO Salim Ramji (who previously managed the massive ETF business at BlackRock and led the launch of IBIT), Vanguard’s strategy began to subtly shift. The company finally decided to open trading of spot Bitcoin ETFs to its over 50 million global clients. This shift was driven directly by significant client pressure: as institutions like BlackRock and Fidelity absorbed hundreds of billions of dollars into Bitcoin ETFs and earned substantial management fees, Vanguard’s clients were unable to participate due to platform restrictions, with some even threatening to close accounts.

Andrew Kadjeski, head of Vanguard’s investment brokerage business, explained that after observation, they believe that cryptocurrency ETFs have “passed market volatility tests, are operating as designed, and have maintained liquidity,” with related service workflows having matured. This sounds like a technical decision, but behind it lies an unstoppable market trend and user preference. Ameriks also admits that the decision was made after observing market performance since the launch of Bitcoin spot ETFs in January 2024, aiming to ensure that these products are “worthy of their name.” However, he emphasized that Vanguard only provides trading channels and will never offer investment advice on buying or selling crypto ETFs.

This event clearly indicates that in the asset management industry, user demand and capital flows are the most powerful guiding forces. Even an institution renowned for long-term value investing and traditionally skeptical of cryptocurrencies, like Vanguard, cannot entirely ignore a rapidly growing asset class that some clients strongly demand. Their compromise strategy of “opening channels but not endorsing” is a delicate balance between staying true to their investment philosophy and retaining clients.

The “Digital Labubu” Narrative: Bitcoin’s Dilemma Under Traditional Valuation Frameworks

While opening the trading channel, Vanguard executives did not abandon their core investment philosophy. At a recent deep ETF conference in New York, John Ameriks drew a widely discussed analogy: he compared Bitcoin to a “digital Labubu.” Labubu is a trendy blind box collectible series that became popular in recent years, whose value is entirely based on community consensus and collector preferences, rather than intrinsic production. Ameriks used this analogy to precisely convey his view: Bitcoin lacks the income, compound interest, and cash flow attributes that traditional investment assets possess, making it more akin to a speculative collectible rather than a “productive asset” capable of generating cash flows.

This viewpoint is deeply rooted in the traditional DCF (discounted cash flow) valuation framework. In this framework, stock value derives from future cash flows discounted to present, bonds from interest and principal, and real estate from rental income. Bitcoin does not pay dividends, nor generate interest; its value seems entirely supported by future buyers’ willingness to pay higher prices—a characteristic consistent with the “greater fool” theory of speculation. Ameriks openly admits that unless Bitcoin’s price can be reliably linked to specific scenarios like high inflation or political turmoil, it’s difficult to construct a serious investment logic around it.

Vanguard’s stance echoes the views of many traditional value investors. They acknowledge blockchain technology’s potential to improve market structure (and their company’s spokesperson also expressed optimism), but strictly distinguish “technology” from “tokens.” In their view, Bitcoin’s short history, extreme volatility, and lack of intrinsic cash flow make it currently unsuitable for inclusion in serious long-term asset allocation models. Recent data from the U.S. Financial Industry Regulatory Authority (FINRA) shows that 66% of American investors who understand cryptocurrencies consider their risk “very high” or “high,” further confirming that mainstream markets still hold widespread caution.

Vanguard’s “Contradictory” Holdings: The Logic Behind Words and Actions

A closer look at Vanguard’s holdings reveals an interesting phenomenon: although company executives publicly downplay Bitcoin’s value as an asset, Vanguard itself holds indirect exposure to large Bitcoin risk via equity holdings. This seemingly “contradictory” operation actually exposes the complexity of institutional behavior.

Key information on Vanguard’s “indirect association” with Bitcoin:

• Direct stance: No investment advice on crypto, no proprietary crypto ETFs, views crypto ETFs on the platform as “non-core” assets (similar to gold).
• Indirect holdings: Vanguard is the second-largest institutional shareholder of MicroStrategy (MSTR). As of latest data, MicroStrategy holds over 200,000 BTC and is the largest Bitcoin holder among listed companies.
• Logical interpretation: Vanguard’s holding of MSTR stock is based on an investment judgment of the “company” itself (despite its business model being essentially holding Bitcoin), fitting within traditional stock investment logic. This is different from directly allocating to a Bitcoin ETF, which is an investment in the “asset” itself.
• Strategic essence: By investing in “Bitcoin concept stocks,” Vanguard participates in the narrative indirectly, while avoiding the compliance, custody, and accounting challenges associated with direct crypto holdings.

This indirect exposure strategy is not unique among traditional institutions. It allows them to share potential upside of the asset class without violating their principles of not directly purchasing “non-productive assets,” and to hedge against missing out on the trend. It reflects a sophisticated balancing act between “principle persistence” and “practical flexibility.” For Vanguard, investing in a NASDAQ-listed company like MSTR is far easier in terms of risk control, reporting, and investment committee approval than directly buying Bitcoin or related ETFs.

Market Insights: Mainstream Adoption of Crypto Assets is a “Permeation” Rather Than a “Conquest”

The Vanguard case offers an excellent example of the process of crypto assets becoming mainstream. It indicates that this process is not about the romantic narrative of “conquering” Wall Street with crypto philosophy, but rather a slow, pragmatic, and strategic “permeation.”

First, user demand drives change. The success of BlackRock and Fidelity has pushed Vanguard to adapt, demonstrating that in asset management, client capital flows ultimately hold the final say. As long as market demand remains strong, even the most conservative institutions will adjust their service boundaries.

Second, traditional valuation frameworks remain robust. The core of the valuation system—focused on cash flows and intrinsic yields—continues to be the “universal language” of finance in the short term. For Bitcoin to be truly accepted as a “productive asset,” it may require more historical data to demonstrate its systemic value in hedging inflation and geopolitical risks, or the development of more complex on-chain cash flow generating DeFi applications.

Finally, compromise and flexibility are the norm. Approaches like Vanguard’s—“open for business but not recommending,” or indirectly via holdings in related companies—are becoming standard practices for many large institutions during this transitional period. Crypto assets are being integrated into the traditional financial system, but the process involves concessions, rebranding, and redefinition.

For retail investors, Vanguard’s openness provides a more accessible entry point, but the warning from the “digital Labubu” analogy is worth noting. It reminds us that participating in crypto markets requires a clear understanding of their high volatility and valuation logic distinct from traditional assets, to avoid blind optimism driven by industry giants’ involvement. The maturity of the crypto market depends not only on more channels like Vanguard’s opening but also on serious exploration and time-tested validation of their intrinsic value models.