Vanguard Caves After Years: $9.3T Giant Finally Opens Floodgates to Crypto ETFs

One of Wall Street's last crypto holdouts just blinked.

Vanguard—the $9.3 trillion asset manager famous for its skepticism—has reversed course. After years of stonewalling, the firm is now letting its massive client base access spot Bitcoin ETFs. The move signals a tectonic shift in institutional acceptance, forcing even the most conservative giants to acknowledge digital assets.

The Reluctant Titan

Vanguard built its empire on low-cost index funds and traditional finance. Its resistance to crypto wasn't just policy—it was part of the brand. That stance now looks like a relic. Competitors like BlackRock and Fidelity have been scooping up billions in inflows through their own Bitcoin ETFs, leaving Vanguard on the sidelines as the market matured.

Pressure finally cracked the dam. Client demand, competitive pressure, and regulatory clarity created a perfect storm. The firm isn't launching its own fund—yet—but allowing access is the first domino. It grants millions of retail and institutional investors a seamless, familiar path to crypto exposure through their existing accounts.

A $9.3 Trillion Stamp of Approval

This isn't just another firm dipping a toe. Vanguard's sheer scale makes this a landmark moment. Its move legitimizes crypto ETFs for the mainstream, passive-investment crowd—the very investors who once viewed digital assets as speculative gambling. The gates are officially open.

The irony? This conservative giant now helps validate the very asset class it spent years dismissing—a classic Wall Street pivot once the fees became too tempting to ignore.

The new access doesn't mean Vanguard is suddenly bullish on Bitcoin's fundamentals. But it does mean the firm can no longer ignore the demand. In finance, client assets talk—and $9.3 trillion speaks volumes.

Why is Vanguard changing its decision

The firm’s restrictions on crypto ETFs had remained firmly in place even after the Securities and Exchange Commission (SEC) approved the first spot Bitcoin funds in early 2024 and the first ethereum products later that year.

Notably, Vanguard’s internal client guidelines and platform eligibility rules kept those ETFs from its self-directed brokerage system, citing regulatory ambiguity and investor protection concerns.

However, the calculus changed following a sweeping shift in the regulatory environment under the current US administration.

The SEC’s pivot toward a pro-innovation stance, combined with years of court decisions, effectively evaporated the regulatory uncertainty that Vanguard had long cited as a barrier.

Indeed, the approvals of spot crypto ETFs were underpinned by robust frameworks that establish how surveillance-sharing agreements, custody arrangements, and disclosure standards apply to digital assets.

These frameworks, first battle-tested with Bitcoin ETFs, became the template for subsequent products, significantly reducing the operational risk for brokers offering access through retail platforms.

Furthermore, the MOVE is an acknowledgment of irrefutable market realities.

BlackRock’s iShares bitcoin Trust (IBIT) has become one of the fastest-growing ETFs in US history, demonstrating that demand for crypto exposure had decisively shifted from niche trading platforms to mainstream asset managers.

Today, spot Bitcoin funds manage approximately $120 billion in assets across issuers, while Ethereum ETFs collectively hold nearly $20 billion.

At the same time, newer products tracking Solana and XRP are succeeding, thanks to strong market demand.

Beyond regulation, the absence of crypto access had become a burgeoning competitive liability for Vanguard.

Notably, many clients already held crypto ETFs in accounts outside Vanguard while maintaining traditional holdings on the platform. This bifurcation forced advisors to route trades through separate institutions, complicating processes such as tax-loss harvesting and model portfolio management.

So, this decision acknowledges that clients seeking exposure through regulated ETFs should be able to execute those trades within their primary Vanguard accounts rather than migrating capital to outside brokers.

Andrew Kadjeski, head of brokerage and investments at Vanguard, reportedly said:

“Cryptocurrency ETFs and mutual funds 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.”

How will this impact the crypto ETF market?

The direct impact on ETF flows will depend on how Vanguard’s unique client base responds.

Vanguard manages more than $9.3 trillion in assets, but the addressable market for these products is narrower because only self-directed brokerage and IRA accounts are authorized to trade them. Institutional mandates, defined benefit plans, and other pooled vehicles generally remain restricted from such allocations.

Moreover, Vanguard clients exhibit behavior distinct from the active traders who drove early crypto ETF inflows. This demographic favors passive, long-dated index products over thematic or tactical funds.

As a result, initial allocations are expected to be modest. Still, a penetration rate of roughly 0.1% to 0.2% of eligible brokerage assets would imply early flows in the low-single-digit billions, spread across Bitcoin, Ethereum, Solana, and XRP funds.

Meanwhile, the significance of Vanguard’s entry lies not in the velocity of the flows, but in the stickiness of the capital. Unlike the “mercenary capital” of hedge funds or the reactive flows of retail day traders, Vanguard inflows tend to be price-agnostic and permanent.

So, in a standard “60/40/1” portfolio—allocated to equities, bonds, and crypto respectively—automated systems maintain target weightings by selling outperforming assets and buying underperforming ones. If the price of Bitcoin or Solana drops, the portfolio algorithmically buys more to restore the 1% weighting.

This creates a structural “buy the dip” mechanism that could dampen volatility and raise floor prices over a full market cycle.

Moreover, broader distribution typically improves liquidity.

The influx of Vanguard’s diversified volume is expected to narrow bid-ask spreads and reduce execution costs for all investors, further tightening the efficiency of ETF arbitrage mechanisms and the responsiveness of pricing to underlying market movements.

As a result, even a conservative adoption curve could have outsized impacts. So, if only a fraction of Vanguard’s client base allocates a standard 1% to 2% “satellite” position to crypto ETFs, it represents tens of billions of dollars in net new demand.