Vanguard Calls Bitcoin a 'Digital Labubu' – So Why Is It Finally Allowing Crypto ETFs?

One of the most influential voices in global investing just delivered a very mixed message about Bitcoin. On the one hand, Vanguard executive John Ameriks has compared BTC to a kind of digital labubu – a playful way of saying it looks more like a collectible than a core long-term investment. On the other hand, Vanguard has now opened its brokerage platform so clients can trade regulated crypto exchange-traded funds (ETFs) from issuers like BlackRock and Fidelity.

At first glance, this sounds contradictory: if Bitcoin is just a speculative digital toy, why bring it into one of the world’s largest investment ecosystems at all? But under the surface, Vanguard’s stance is more nuanced, and it tells us something important about where digital assets sit today in the hierarchy of global finance.

This article unpacks that tension: why Vanguard still refuses to treat Bitcoin as a core holding, why it nonetheless feels compelled to support ETF access, and what this combination of skepticism and openness means for long-term investors and for the broader crypto market.

What Exactly Has Vanguard Changed?

For years, Vanguard was one of the last major holdouts resisting crypto exposure on its platform. Even after spot Bitcoin ETFs launched, the firm declined to make them available for purchase, arguing that its focus would remain on traditional building blocks like stocks, bonds, and cash.

That posture has now softened. Vanguard still does not issue its own Bitcoin product, but it does allow clients to trade third-party crypto ETFs and mutual funds that hold assets such as Bitcoin and Ethereum. The firm is essentially saying: 'We still don’t view this as a core long-term asset, but if you insist on accessing it, we will provide a regulated, fund-based route rather than forcing you to move accounts elsewhere.'

In simplified form, the new stance looks like this:

• Access, not endorsement: Clients can trade select crypto ETFs and funds, but Vanguard is not marketing them as essential pieces of a long-term portfolio.
• No homegrown products: The firm has no plans to launch its own crypto funds, mirroring its approach to gold – it provides access to some external products but does not run its own flagship vehicle.
• Guardrails on product quality: The focus is on regulated ETFs and mutual funds tied to major assets, rather than highly speculative niches.

In other words, Vanguard is drawing a sharp line between platform access (where it now accommodates client demand) and philosophical conviction (where it remains cautious about Bitcoin’s role as a long-term compounder of capital).

Why Call Bitcoin a 'Digital Labubu'?

Ameriks’s description of Bitcoin as a kind of 'digital labubu' is colourful, but the underlying logic is straightforward. From a traditional asset-management perspective, there are a few attributes that make something a candidate for long-term, core portfolio status:

• It generates income or cash flows (dividends, coupons, rental income, etc.).
• Its value can be anchored in fundamentals like earnings, productivity, or contractual payments.
• It compounds over time as those cash flows are reinvested.

Equities and bonds naturally fit this framework. A stock delivers earnings and dividends that, over decades, can compound. A bond pays coupons and returns principal. Even real estate can be modeled through rental income and long-term demand for space.

Bitcoin, by contrast, does not generate cash flows. Its expected return is driven by adoption, scarcity, and perceived usefulness as a store of value or collateral, rather than by earnings or coupons. To a firm like Vanguard, which built its identity on low-cost access to broad equity and bond markets, that makes BTC much closer to a speculative store of value than a classic investment with a fundamental yield engine.

Importantly, this is not a uniquely anti-Bitcoin view. Vanguard has historically placed gold in a similar category: potentially useful for some investors as a diversifier, but not a core engine of long-term wealth building. Gold does not produce cash flows either – its value rests on scarcity, convention, and macro narratives around inflation and currency debasement.

So when Ameriks reaches for a metaphor like 'digital labubu,'' he is really saying: 'This may have value to some people, especially under extreme conditions, but it does not meet our internal definition of a long-term compounding asset.'' That’s a philosophical stance, not a prediction that Bitcoin will succeed or fail.

From Hard 'No' to Reluctant 'Yes': Why the U-Turn?

If the philosophy hasn’t changed much, why has the platform policy changed so dramatically?

There are three broad forces pushing an institution like Vanguard toward a more open stance on crypto, even while staying publicly cautious.

1. Client Demand and Competitive Pressure

When large numbers of investors want a specific exposure, completely blocking it has a cost. Clients can – and do – move to other brokers if they feel their preferences are being ignored. Over time, that erodes assets under management and weakens relationships.

By allowing trading of third-party crypto ETFs, Vanguard retains those clients on its platform, even if it continues to make the case that such products should be handled carefully and sized modestly. It is a pragmatic response to the reality that digital assets have become part of the mainstream investment conversation.

2. Maturing Infrastructure

The first wave of crypto products was messy: complex structures, fragile liquidity, weak governance. Over the past few years, the ecosystem has professionalized. Custodians are more established, fund structures clearer, and operational processes around settlement and reporting more robust.

From a risk-management perspective, that matters. A regulated ETF that holds spot Bitcoin with institutional-grade custody is very different from opaque products with unclear backing. As the fund infrastructure has matured, it has become easier for conservative firms to say: 'We still think this is speculative, but the wrapper is now robust enough that we can host it under strict conditions.'

3. The Cost of Ignoring a New Asset Class

Finally, there is a reputational and strategic angle. If Bitcoin and other major digital assets continue to embed themselves into the global financial system – as reserves, as collateral, as components of multi-asset portfolios – then a blanket refusal to engage starts to look less like caution and more like stubbornness.

By opening the door to external ETFs, Vanguard can preserve its core philosophy while avoiding the perception that it is out of touch with how capital markets are evolving. The 'digital labubu' language signals continued skepticism; the ETF access acknowledges that the asset class is now too large to be ignored.

What This Signals About Bitcoin’s Place in Traditional Finance

Vanguard’s shift does not mean Bitcoin has suddenly been anointed as a blue-chip, must-own asset. It does, however, reinforce three important realities about where BTC now sits in the global hierarchy.

• Bitcoin has cleared the 'legitimacy of access' hurdle. When a cautious, low-cost giant is willing to list regulated BTC funds, it acknowledges that digital assets are part of the investable universe, even if only as satellite exposures.

• There is a clear distinction between access and advice. Providing a way to trade crypto ETFs is not the same as recommending them as core holdings. Vanguard is explicitly maintaining that separation.

• Bitcoin is being treated more like gold than like equities. It is framed as a potential diversifier or macro hedge – something that may earn a small allocation for certain investors, but not a central role in long-run compounding plans.

For the crypto ecosystem, this is both progress and constraint. Progress, because the 'you can’t buy this here' wall is coming down at one of the biggest brokerage platforms in the world. Constraint, because the messaging to mainstream investors is still: 'Treat this as speculative, size it cautiously, do not rely on it to fund your retirement by itself.'

How Long-Term Investors Might Read Vanguard’s Mixed Message

For individual investors and family offices, the interesting question is not whether Vanguard is 'bullish' or 'bearish' on Bitcoin. The firm has made it clear that it views digital assets through a risk-first lens. The deeper question is: What can we learn from that lens?

1. Separate the Technology Story From the Portfolio Story

It is entirely possible to believe that blockchains and digital assets will be integral to future financial infrastructure, while still concluding that a particular token is hard to value or too volatile for a large allocation. Vanguard’s framing implicitly encourages this separation.

On the technology side, Bitcoin has already proved several important points: censorship-resistant settlement, programmable scarcity, and the ability to operate outside traditional banking hours and rails. On the portfolio side, however, its role is still evolving: correlations shift across cycles, drawdowns are severe, and the long-run equilibrium for adoption is unknown.

Seeing Bitcoin as a speculative store of value does not deny its technological significance; it simply acknowledges that owning it is not the same as owning a cash-flowing business.

2. Think in Terms of Risk Budgets, Not Slogans

Vanguard’s resistance to calling BTC a core asset is a reminder to think in terms of risk budget rather than slogans like 'digital gold' or 'future of money.' A disciplined allocator might reasonably decide that:

• A modest allocation to Bitcoin and possibly Ethereum belongs in the 'alternative assets' bucket.
• The size of that bucket should reflect the investor’s time horizon, drawdown tolerance, and overall financial situation.
• Any allocation should be paired with clear rebalancing rules to avoid turning a small experiment into an unintended oversized exposure.

This is very different from the all-or-nothing narratives that often dominate online discussions. Vanguard’s institutional caution – even while opening ETF access – effectively points investors back toward sizing and process, not slogans.

3. Respect the Asymmetry of Knowledge and Responsibility

Another subtle message in Vanguard’s stance is about responsibility. By not issuing its own crypto ETFs and by refraining from active crypto marketing, the firm is signalling: 'If you choose to walk into this part of the market, you must take ownership of that decision.'

For individual investors, that means understanding at least the basics of how these products work – what the underlying fund holds, what fees it charges, how it handles custody, what the key risks are. The 'digital labubu' label is a reminder that, in Vanguard’s view, these are not set-and-forget, retirement-plan building blocks, but discretionary tools that require extra due diligence.

Implications for Crypto Beyond Bitcoin

Vanguard’s move is not just about BTC. The firm’s willingness to list funds tied to other major assets such as Ethereum, while still drawing clear lines around what it will not support, creates a rough map of what the most conservative parts of TradFi are currently willing to tolerate.

On that map, large-cap assets with clear narratives, deeper liquidity, and institutional-grade infrastructure are slowly moving toward acceptable satellite exposure' status. More speculative segments of the market remain far from that threshold.

For builders and projects, the lesson is straightforward: the closer your asset looks to a transparent, well-governed, economically meaningful protocol with real usage, the easier it will be for large institutions to justify providing access – even if they never fully embrace it as a core holding.

Does Vanguard’s Skepticism Undermine the 'Digital Gold' Thesis?

Some crypto advocates may see Ameriks’s 'digital labubu' remark as dismissive. But in practice, it may not be as damaging to the 'digital gold' story as it sounds.

Gold itself spent decades being viewed by many institutions as a volatile, non-productive asset. Even today, many large investors treat it as a small satellite position rather than a portfolio cornerstone. Yet that did not prevent gold from becoming a multi-trillion-dollar store of value, widely used by central banks and long-horizon allocators.

Bitcoin’s challenge is similar but steeper: build a long enough track record across different macro regimes that investors can see how it behaves in inflationary periods, deflationary scares, equity bear markets, and periods of monetary easing or tightening. Only then can allocators judge whether it truly deserves a role alongside, or in some cases instead of, traditional stores of value.

In that sense, Vanguard’s position is less 'this can never work' and more 'the sample size is still small.'' The firm is willing to host the experiment on its platform, but not yet willing to treat the outcome as a given.

Adoption Without Full Endorsement: The New Middle Ground

The combination of harsh-sounding language and practical ETF access may feel contradictory, but it is likely a preview of how many conservative institutions will handle digital assets over the next decade:

• They will open the gates to regulated, well-structured products so clients do not need to leave.
• They will continue to describe these assets as speculative and remind investors of their volatility and lack of cash flows.
• They will focus on risk management and sizing rather than trying to pick winners inside the crypto ecosystem.

For crypto, this middle ground is both a test and an opportunity. It strips away the ability to claim that 'Wall Street is blocking us' while also forcing projects and investors to live up to the same expectations of transparency, governance, and suitability that apply to other asset classes.

For traditional investors, it is a reminder that you can be curious about new financial technologies without abandoning the principles that got you here – diversification, cost control, long horizons, and respect for risk.

Disclaimer: This article is for informational and educational purposes only and does not constitute investment, legal, or tax advice. Digital assets are volatile and may not be suitable for every investor. Always do your own research and consider consulting a licensed professional before making financial decisions.

Further Reading & Related Topics

Bitcoin · Regulation · Macro & Crypto