Vanguard has submitted an application to the SEC for a new fund that hints at a potential reevaluation of its stance on cryptocurrencies.
A recent event has led many individuals to speculate that investment banking firm Vanguard might be reevaluating its stance on cryptocurrencies.
Vanguard Offers Definition of Crypto Terms
A recent update disclosed that the company has submitted an application to the United States Securities and Exchange Commission (SEC) for a new “Vanguard Specialized Funds.”
The disclosure stated that the Fund aims to track the performance of a benchmark index, which measures the investment return of common stocks of companies with a track record of increasing dividends over time. “The Fund’s goal is to match the performance of the benchmark index.
“The investment management company provided several essential concepts associated with cryptocurrencies, including a reference to digital currency, in the filed submission.
Vanguard coined the term “digital currency” to describe a digital asset that functions as a simple means of trade, a unit of account, or a store of value. Furthermore, no country, central bank, or public body issued or guaranteed this digital asset.
Vanguard’s submitted document suggests that digital assets employ algorithmic techniques to control the creation of new units of these diverse assets.
The document also includes transactions involving the digital asset, recorded on either a distributed ledger or a decentralized network. Moreover, the company went on to differentiate between digital currency and digital security tokens, which is an important consideration.
This second category of digital assets includes all digital assets not classified as either digital currency or digital utility tokens. As stated in the submission to the SEC, a digital security token frequently derives its value principally from a separate asset or pool of assets, or it represents an interest in such an asset or pool of assets.
The digital utility token is the final category of assets that Vanguard delineates in its description. According to the description, this is a digital asset that grants access to a specific network, product, or service, amongst other things.
Vanguard Frowned at Spot Bitcoin ETFs
Despite the fact that it is not known for certain which path Vanguard is taking with this “sensitization” of digital assets, the corporation has in the past portrayed itself as an adversary of Bitcoin.
While other leading financial asset management companies, like BlackRock and Fidelity, had the opportunity to test the waters of spot Bitcoin exchange-traded funds (ETFs) in January, Vanguard made it abundantly clear that it had no interest in participating in the offering.
The decision by Vanguard was based on the extremely speculative and unregulated nature of the cryptocurrency market as a whole. Additionally, the company stated that its long-term investing strategy is in direct opposition to the company’s choice.
In the meantime, Tim Buckley, who has served as the current chairperson and CEO of the company for more than three decades, is planning to step down from his position by the end of 2024.
The business has chosen Salim Ramji, a former executive at BlackRock, as the new chief executive officer in anticipation of his departure later this year.
Ramji’s hiring is sparking speculation about a possible long-term shift in stance, given his years of experience running BlackRock’s global ETF business. The appointment of Ramji fuels this suspicion.