Charles Schwab Examines Crypto Allocation Approaches as Direct Trading Launch Nears

Charles Schwab, the largest publicly traded U.S. brokerage firm managing over $12 trillion in client assets, published a research report on April 7, 2026 stating there is no “correct” crypto allocation and that even small exposure can increase portfolio risk, while separately opening a waitlist for Schwab Crypto to offer direct Bitcoin and Ethereum trading.

The report outlined return-based and risk-based approaches to crypto investing, noting that Bitcoin has shown 72% annualized volatility and Ether nearly 98%, and that crypto allocations bring larger risk concentration relative to traditional assets.

Return-Based Approach Suggests Crypto Allocations Depend on Expected Returns

Under the return-based approach, also called mean-variance optimization, allocations vary with expected returns. If an investor assumes Bitcoin returns of 15% per year, Schwab calculated allocations of approximately 1% in a conservative portfolio, 6.6% in a moderate portfolio, and 8.8% in an aggressive portfolio. For Ether, which is more volatile than Bitcoin, allocations would be smaller: 0.1% for conservative, 2% for moderate, and 2.5% for aggressive portfolios. Schwab added that if expected returns fall below 10%, neither Bitcoin nor Ether may justify any allocation, even for aggressive investors.

Bitcoin has shown annualized volatility of approximately 72% and drawdowns exceeding 70%, much higher than traditional assets like stocks and bonds. Ether has been even more volatile, with nearly 98% annualized volatility and drawdowns approaching 88%.

Risk-Based Approach Focuses on Crypto’s Contribution to Total Portfolio Risk

Under the risk-based or risk budgeting approach, allocations are determined by how much total portfolio risk comes from crypto, such as 5%, 10%, or 15%, across conservative, moderate, and aggressive portfolios. In these cases, crypto exposure is taken from the equity portion of the portfolio. Schwab stated that in a conservative portfolio, a 1.2% allocation to Bitcoin or 0.9% to Ether can represent 10% of total portfolio risk. In moderate and aggressive portfolios, 2.8% to 4% allocation to Bitcoin and 2% to 2.9% to Ether can reach similar risk levels.

Schwab noted that cryptocurrencies can provide some diversification benefits in a portfolio already allocated to traditional investments such as stocks, bonds, and cash. However, the firm emphasized that investors must recognize that adding cryptocurrency brings a larger concentration of risk relative to traditional assets, and as weightings increase even modestly, portfolio performance will be increasingly attributable to the crypto allocation.

Schwab Launches Direct Crypto Trading with Schwab Crypto Waitlist

Charles Schwab has opened a waitlist for Schwab Crypto, a new account that will let clients buy and sell Bitcoin and Ether directly. The rollout begins with a phased approach, initially covering only Bitcoin and Ethereum. For now, Schwab offers crypto exposure through exchange-traded products, crypto-related stocks, over-the-counter trusts, and futures for approved accounts.

The move into direct crypto trading follows Schwab’s earlier stance in 2019 when the firm dismissed crypto as “purely speculative.” The firm has since changed its view over time, and the new service positions Schwab alongside competitors like Fidelity and Robinhood that already offer spot crypto trading. By keeping crypto activity on its own platform, Schwab aims to retain clients who might otherwise use external exchanges for digital asset exposure.

The direct trading launch comes as Schwab’s stock (NYSE: SCHW) trades at approximately $93, with a 34.4% return over the past year and 87.9% over three years.

FAQ

What two approaches does Charles Schwab recommend for crypto portfolio allocation?

Schwab outlined a return-based approach (mean-variance optimization) that looks at expected returns, volatility, and correlations, and a risk-based approach (risk budgeting) that focuses on how much risk crypto adds to the overall portfolio. Both approaches can be used together to help investors make informed decisions.

How much crypto allocation does Schwab suggest for different portfolios?

Under a 15% annual return assumption for Bitcoin, Schwab suggests allocations of about 1% for conservative portfolios, 6.6% for moderate, and 8.8% for aggressive. For Ether, allocations would be 0.1%, 2%, and 2.5% respectively. If expected returns fall below 10%, even aggressive investors may not justify any crypto allocation.

What direct crypto trading services is Schwab launching?

Schwab has opened a waitlist for Schwab Crypto, which will allow clients to buy and sell Bitcoin and Ether directly. The rollout is phased, starting with these two assets. Currently, Schwab offers crypto exposure through ETFs, crypto-related stocks, trusts, and futures for approved accounts.