Vanguard’s Bitcoin Play Sparks Debate as Wall Street’s Crypto Hypocrisy Exposed

Wall Street's love-hate tango with Bitcoin takes another twist.

Vanguard—the $7 trillion index-fund giant that publicly shuns crypto—quietly built Bitcoin exposure through indirect holdings. Now the internet’s digging up their blockchain receipts.

How? Through Grayscale’s GBTC and MicroStrategy shares tucked inside passive funds. Classic "do as I say, not as I do" from finance’s hallowed halls.

Meanwhile, retail traders get KYC’d into oblivion for buying the same assets. Nothing personal—just business (and 0.03% expense ratios).

Will Vanguard pivot like BlackRock did? Unlikely. But their accidental crypto bet proves even boomer money can’t ignore digital gold forever.

TLDR

• Vanguard Gains Big from Strategy’s Bitcoin Bet, Despite Crypto Skepticism

• Vanguard’s Anti-Crypto Stance Clashes with $9B Stake in Bitcoin-Heavy Firm

• Index Rules Force Vanguard into Bitcoin via Soaring Strategy Inc. Shares

• Vanguard Profits from Bitcoin Exposure It Publicly Opposes

• Bitcoin-Rich Strategy Inc. Boosts Vanguard Funds Despite Policy Dissonance

Vanguard, the $10 trillion asset manager, holds a major stake in Strategy Inc., formerly MicroStrategy. This comes despite the firm’s firm public stance against Bitcoin and digital assets. Its position includes over 20 million shares of the company, which is known for its heavy Bitcoin exposure.

Although Vanguard opposes digital assets in portfolios, index rules have forced indirect exposure. Its passive funds must mirror market benchmarks, leading to unexpected Bitcoin-linked holdings. Consequently, Strategy’s inclusion in indexes has automatically placed it in numerous Vanguard funds.

The stake is paying off. Strategy’s value surged over 850% in two years, outpacing Bitcoin’s rally. Therefore, Vanguard’s exposure has grown significantly in dollar terms across its broad index products.

Bitcoin-Heavy Strategy Inc. Drives Passive Portfolio Gains

Strategy Inc. transformed by acquiring bitcoin since 2020. Under CEO Michael Saylor, the firm issued debt and equity to finance those acquisitions. As a result, it now holds over $70 billion in Bitcoin, the largest corporate cache worldwide.

Vanguard’s largest stake comes through its Total Stock Market Index Fund with over 5.7 million shares. Several other index products, including its Growth ETF and Extended Market Fund, also hold millions of shares. Collectively, the firm’s Strategy holdings total around $9.26 billion.

Although Strategy was not part of the S&P 500, its inclusion in the Nasdaq 100 expanded its exposure. Passive funds tracking the Nasdaq 100 automatically added Strategy to their holdings. Hence, Vanguard’s crypto linkage deepened regardless of its stated disapproval.

Actively Managed Holdings Add Another Layer of Exposure

Vanguard also holds Strategy in some actively managed portfolios. These funds use quantitative models and factor-based strategies, not manager discretion. This approach led to minor Strategy holdings in both VSEQX and VFMO.

Vanguard clarified that these model-based selections do not reflect endorsement or belief in Strategy’s business model. However, the presence remains and contributes to the overall exposure in Bitcoin-linked equities. Some actively managed funds have held Strategy since at least February.

Even as Vanguard denies any shift in crypto policy, its exposure is growing due to structural fund design. The firm’s neutrality in fund construction allows indirect holdings to accumulate. Therefore, the contradiction between philosophy and practice continues to deepen.

Crypto Skepticism Persists as Holdings Grow

Vanguard continues to reject direct crypto investment products on its brokerage platform. It maintains that digital assets lack intrinsic value and are inappropriate for long-term portfolios. Former CEO Tim Buckley reiterated this view during the launch of Bitcoin ETFs in the US.

Crypto has embedded itself in traditional indexes, making exposure nearly unavoidable. As more firms follow Strategy’s model, Vanguard and others may gain more Bitcoin-linked exposure unintentionally. This situation illustrates the power and limitation of index-driven investing.