Bank of America Authorizes Up to 4% Crypto Allocation for Wealth Clients
Bank of America has authorized its wealth management advisors to recommend cryptocurrency allocations of 1 to 4 percent within client portfolios, marking a significant step toward mainstream adoption by traditional finance. The guidance applies to clients of Merrill, Bank of America Private Bank, and Merrill Edge platforms, focusing on spot Bitcoin and Ethereum exchange-traded funds. This policy shift reflects growing institutional comfort with digital assets amid Bitcoin’s stabilization above $90,000 and Ethereum’s post-upgrade gains exceeding 5 percent. The move comes as the firm manages over $4 trillion in assets under administration, potentially channeling billions into crypto markets.
Advisors must conduct thorough risk assessments before implementing allocations, emphasizing diversification and long-term holding strategies over speculative trading. Bank of America’s research division cited Bitcoin’s 150 percent year-to-date performance and Ethereum’s deflationary mechanics post-Fusaka upgrade as key justifications. The 1 to 4 percent range aligns with benchmarks from Yale Endowment’s 2 percent crypto exposure and Harvard’s 3 percent target, balancing volatility against potential returns. Implementation begins immediately for qualified high-net-worth clients, with projected inflows of $20 billion to $80 billion based on 2 percent average adoption across eligible accounts.
This endorsement follows Vanguard’s recent expansion of crypto ETF access to its 50 million clients, enabling direct purchases through brokerage platforms. Bank of America’s decision leverages partnerships with Coinbase Custody for secure storage, ensuring compliance with SEC custody rules under Rule 206(4)-2. Client portfolios will integrate crypto via low-fee ETFs like BlackRock’s iShares Bitcoin Trust, which holds $50 billion in assets and trades at 0.25 percent expense ratios. The policy excludes leveraged products and stablecoins, prioritizing spot exposures to mitigate liquidation risks seen in recent $500 million market-wide events.
Challenges include regulatory scrutiny from the SEC’s ongoing stablecoin framework and CFTC’s new spot trading arenas launching this week. Bank of America’s wealth unit reported 15 percent of advisors already fielding crypto inquiries quarterly, up from 5 percent in 2024. The firm employs 18,000 financial advisors trained on blockchain basics, with ongoing modules covering smart contract vulnerabilities and on-chain analytics. Revenue from advisory fees on crypto allocations could add $100 million annually, based on 0.5 percent management fees applied to projected inflows.
Broader implications signal accelerating convergence between Wall Street and crypto ecosystems. The CFTC’s approval of spot trading on exchanges like Bitnomial introduces regulated venues handling up to 50x leverage, drawing $10 billion in initial volumes. Europe’s MiCA framework, expanding ESMA oversight to 200 crypto firms by 2026, prompts U.S. incumbents like Bank of America to preempt competitive disadvantages. Sovereign wealth funds, per BlackRock CEO Larry Fink, have dollar-cost averaged $5 billion into Bitcoin ETFs during recent dips to $80,000. This policy positions Bank of America to capture a portion of the $1.5 trillion institutional crypto market, projected to grow 25 percent annually through 2030 via hybrid custody solutions and tokenized securities.
