Vanguard Becomes Top Shareholder in Crypto Firm Strategy Despite Bitcoin Criticism

Vanguard, the $10 trillion asset management giant, has become one of the institutions with the most indirect exposure to Bitcoin, despite its well-known criticism of cryptocurrencies. The company does not directly invest in Bitcoin, but through the logic of index funds, it has become a significant investor in Strategy shares, a prominent name in the crypto market. Vanguard holds about 8% of Strategy's publicly traded Class A shares, amounting to more than 20 million shares. This positions Vanguard as the top shareholder in the fourth quarter, surpassing Capital Group. These shares are held by various Vanguard funds, including those tracking small- and mid-cap companies, as well as value, growth, and momentum strategies.

Vanguard's management has consistently maintained a critical stance against cryptocurrencies. CEO Tim Buckley has described Bitcoin as “speculative and lacking in economic value, unsuitable for long-term portfolios.” He also prohibited Bitcoin ETFs from trading on his platform when they launched in the US in 2024. “It's hard to imagine how they could fit into a truly long-term portfolio,” Buckley stated.

Strategy, formerly known as MicroStrategy, became the first public company to invest heavily in Bitcoin since 2020. Led by Michael Saylor, the company funds its Bitcoin purchases by both borrowing and issuing stock. Since then, the company's shares have increased by approximately 3,400%. As the largest individual shareholder, Michael Saylor holds approximately 20 million shares, making him the world's largest institutional Bitcoin holder with over $70 billion in Bitcoin reserves. “This is a strong signal that Bitcoin is increasingly being accepted by the traditional financial community as a legitimate reserve asset,” Saylor commented on Vanguard's large holdings.

Vanguard's potential shift towards Bitcoin is significant given the company's history of advocating for traditional investment strategies. The firm has long been a proponent of low-cost index funds and passive investing, which has made it a favorite among retail investors. However, the data suggests that Vanguard may be recognizing the potential of Bitcoin as a store of value and a hedge against inflation, similar to gold.

The implications of Vanguard's potential embrace of Bitcoin are far-reaching. If the firm continues to invest in the cryptocurrency, it could help to legitimize Bitcoin in the eyes of other institutional investors. This could lead to increased demand for Bitcoin, potentially driving up its price and further solidifying its position as a viable investment asset. Additionally, Vanguard's involvement in the cryptocurrency space could spur innovation in the financial industry, as other firms look to replicate the firm's success.

However, it is important to note that Vanguard has not officially confirmed its investment in Bitcoin. The data is based on analysis of the firm's investment holdings and may not reflect the company's official stance on the cryptocurrency. Nonetheless, the data suggests that Vanguard may be more open to Bitcoin than previously thought, which could have significant implications for the future of the cryptocurrency and the broader financial industry.