Bank of America begins considering cryptocurrencies! Wealth management clients' investment portfolios capped at a maximum allocation of 4%

Bank of America (BAC) has stated that its wealth management clients should begin considering allocating some cryptocurrency in their portfolios. The company supports clients of its Merrill, Bank of America Private Bank, and Merrill Edge platforms, with a recommended digital asset allocation of 1% to 4%. Starting January 5, the company will recommend four Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust (IBIT).

Bank of America Opens 1% to 4% Crypto Allocation

Chris Hyzy, Chief Investment Officer of Bank of America Private Bank, said in a statement: “For investors with a strong interest in thematic innovation and who can tolerate high volatility, a moderate digital asset allocation of 1% to 4% may be appropriate. Our guidance emphasizes regulated vehicles, thoughtful allocation, and a clear understanding of opportunities and risks.” This marks a significant shift in the attitude of U.S. traditional financial institutions toward cryptocurrency.

While a 1% to 4% allocation may seem conservative, it is a major breakthrough for the wealth management industry. Traditional wealth management adheres to principles of diversification and risk control, and has typically been cautious towards highly volatile assets. Bank of America’s willingness to include cryptocurrency in portfolio recommendations shows that its internal risk assessment models have recognized the legitimacy of crypto as an asset class.

“The lower end of this range may be more suitable for conservative risk-tolerant investors, while the higher end may be appropriate for those with greater overall portfolio risk tolerance,” Hyzy added. This tiered advice shows that Bank of America is taking a personalized allocation strategy, rather than a one-size-fits-all approach. For conservative investors, a 1% allocation allows participation in the crypto market without significantly increasing risk, while for aggressive investors, a 4% allocation can potentially capture greater returns within a manageable risk framework.

Starting January 5, the Bitcoin ETFs covered by the company’s CIO will include Bitwise Bitcoin ETF (BITB), Fidelity’s Wise Origin Bitcoin Fund (FBTC), Grayscale’s Bitcoin Mini Trust (BTC), and BlackRock’s iShares Bitcoin Trust (IBIT). These four ETFs have been strictly selected and are among the largest, most liquid, and lowest-fee products in the market.

Previously, Bank of America’s affluent clients could only access these products through special applications, which meant the network of over 15,000 wealth advisors at the bank could not recommend crypto risk, leading many retail investors to look elsewhere. This restriction caused Bank of America to lag competitors in crypto market share. The current policy shift enables 15,000 wealth advisors to proactively recommend crypto allocations to clients, which will have a profound impact on the market.

“This update reflects the growing client demand for digital asset access,” added Nancy Fahmy, head of Bank of America Investment Solutions Group. This demand-driven policy adjustment shows that wealth management clients’ interest in crypto can no longer be ignored. When high-net-worth clients actively request crypto allocations, wealth management firms must respond or risk losing clients.

Wall Street Pivot: Morgan Stanley, Fidelity, BlackRock Allocation Recommendations

Bank of America’s recommendation comes amid a broad push by other major banks and asset managers into the crypto market. In a report released in early October, Morgan Stanley’s Global Investment Committee provided investors and financial advisors with allocation parameters, recommending 2% to 4% of portfolios be concentrated in crypto, describing it as “a speculative but increasingly popular asset class that many investors (but not all) will want to explore.”

In early 2025, BlackRock suggested investors should allocate 1% to 2% of their portfolios to Bitcoin. In March 2024, Fidelity Investments recommended an allocation of 2% to 5% (7.5% for investors under age 30). On Monday, Bloomberg reported that Vanguard will allow select crypto ETFs and mutual funds on its platform starting Tuesday. Morgan Stanley (MS), Charles Schwab (SCHW), Fidelity Investments, and JPMorgan (JPM) already allow all clients to invest in certain crypto ETFs.

Major Financial Institutions’ Crypto Allocation Recommendations Comparison

Bank of America: 1%-4% (announced December 2025)

Morgan Stanley: 2%-4% (October 2025)

BlackRock: 1%-2% (early 2025)

Fidelity Investments: 2%-5%, 7.5% for under 30 (March 2024)

This collective pivot on Wall Street reflects a historic shift as crypto moves from a fringe speculative tool to mainstream asset allocation. When the world’s largest financial institutions begin recommending crypto allocations to clients, it is the strongest endorsement of the asset class’s legitimacy.

Fintech bank SoFi (SOFI) began offering direct crypto trading to retail clients a month ago, and several banks—including Charles Schwab, Morgan Stanley, and super-regional lender PNC (PNC)—are expected to follow. Many U.S. banks are waiting for Congress to pass a key crypto bill that would establish a general framework for federal oversight of direct crypto trading, custody, and related services.

Trump Administration Regulatory Shift Accelerates Institutional Adoption

This year, the Trump administration led a dramatic reversal in U.S. crypto policy, removing many guidance barriers put in place during the Biden era that restricted banks from participating in various crypto activities, and provided the industry with greater regulatory clarity. This policy shift is a key precondition for institutions like Bank of America to open up to crypto allocation. Under Biden, regulators took a cautious stance on bank participation in crypto due to concerns about systemic risk and consumer protection.

However, the Trump administration quickly changed this position. The firing of SEC Chair Gensler, appointment of crypto-friendly regulators, and plans to establish a national Bitcoin reserve all sent a clear message to the market: the U.S. will embrace, not resist, crypto. This regulatory certainty has removed compliance concerns for banks and asset managers, allowing them to confidently recommend crypto assets to clients.

Although this dynamic has turned Wall Street and more investors bullish, the crypto market has faced a tough period in recent weeks. After reaching an all-time high of $126,000 in early October, Bitcoin’s price as of Monday afternoon has fallen about one-third to around $85,000. Year-to-date, Bitcoin is down about 10%, while the S&P 500 Index (^GSPC) is up more than 15% in 2024.

This price pullback coincides with the timing of institutional adoption, providing investors with an interesting entry window. When wealth managers officially open up allocation recommendations, it typically means the asset has undergone thorough due diligence and risk assessment. Bank of America’s decision to announce this policy during a Bitcoin pullback rather than at a peak suggests it sees current prices as attractive, or at least believes the long-term outlook is strong enough to offset short-term volatility risk.