New Vanguard CEO Vows Never to Touch Bitcoin

In his first TV interview since becoming Vanguard CEO, Tim Buckley said that the investment group would stay away from Bitcoin as the cryptocurrency does not have real value.

Tim Buckley, the newly appointed CEO of Vanguard, said in an interview with CNBC that his investment company had no intentions of investing in Bitcoin. The largest mutual funds provider and the second largest exchange-traded funds (ETFs) provider does not consider Bitcoin an asset with real value. 

Buckley told CNBC:

“You will never see a fund from Vanguard on bitcoin. We tend to stay away from assets that don't have underlying economic value. They don't generate earnings or cash flows.”

However, some big players on Wall Street have not hesitated to launch Bitcoin-related products. Leading the way were Chicago-based CME and CBOE, which now offer Bitcoin futures contracts and investors can go long or short on Bitcoin quotations. 

Last week, NYSE owner Intercontinental Exchange (ICE) announced that it would launch a cryptocurrency data feed that would gather rates and other indicators from about 15 global crypto exchanges and send the information to financial companies.

However, Vanguard is not among the companies that find real value in Bitcoin. 

“The bitcoin – its value is based off of scarcity – and an artificial scarcity that's out there. It's really tough to imagine where the long-term return comes from other than speculation,” Buckley said. 

He compared Bitcoin to gold, a commodity that also lacks fundamental economic value and is mostly used by savers. For this reason, Vanguard steers clear of gold as well. 

Buckley is only the fourth CEO in the history of Vanguard, which was established in 1975 and currently manages about $4.5 trillion in assets. He was appointed at the start of this month, succeeding Bill McNabb. 

Despite being quite skeptical on Bitcoin, the mutual fund and ETF provider is quite positive about blockchain, the technology behind most cryptocurrencies. Late in 2017, Vanguard said it would use blockchain for some tasks related to index data updating for its funds.