Bank of America Endorses Crypto Allocations Up to 4%

Bank of America, one of the world’s largest financial institutions, is making a decisive pivot toward digital assets. According to reports from Yahoo Finance, starting next year, investment strategies on the bank’s Merrill, Bank of America Private Bank, and Merrill Edge platforms will formally support client allocations to cryptocurrencies of up to 4%. This marks a dramatic change from the previous policy, where over 15,000 wealth advisors at the firm were unable to make crypto-related recommendations and clients could only access such products upon specific request.

The bank’s chief investment officer for its Private Bank, Chris Hyzy, framed the move in a statement, describing “a modest allocation of 1% to 4% in digital assets” as appropriate for investors with “a strong interest in thematic innovation and comfort with elevated volatility.” Hyzy provided further nuance, indicating the lower end of the 1-4% range is suitable for conservative investors, while the full 4% allocation is earmarked for those with high risk tolerances. This structured guidance provides a clear framework for the bank’s vast network of advisors and clients navigating the volatile crypto market.

Complementing the new allocation policy, Bank of America will deepen its institutional engagement with the asset class. On January 5, the bank’s wealth management division will initiate coverage of Bitcoin exchange-traded funds (ETFs) from major asset managers, including Bitwise (BITW), Fidelity, Grayscale (GBTC), and BlackRock (IBIT, BLK). This move provides clients with researched access to some of the most prominent regulated crypto investment vehicles, further legitimizing them within traditional portfolio construction.

Bank of America is not alone in this institutional shift. The development follows closely on the heels of a report that Vanguard (VANGUARD), another titan of the investment world, will soon begin allowing investors on its platform to access crypto-focused ETFs and mutual funds. Furthermore, Fidelity (FIDELITY) has previously recommended allocations between 2% and 5% to Bitcoin, suggesting up to 7.5% could be worthwhile for younger investors. The appointment of a Bitcoin-friendly CEO at the world’s second-largest asset manager in May underscores this accelerating trend of traditional finance (tradfi) giants integrating digital assets.

This wave of institutional endorsement arrives amid a period of significant volatility for Bitcoin (BTC). According to data from CoinGecko, Bitcoin’s price had jumped to near $91,600 at one point on the Tuesday the report emerged, showing a 7.6% gain over 24 hours. However, this recent uptick follows a broader correction; the largest cryptocurrency by market value remains down approximately 30% since hitting a record high above $126,000 in early October. This volatility is precisely the “elevated” risk profile that Bank of America’s Chris Hyzy referenced, highlighting that the bank’s endorsement comes with clear-eyed recognition of the asset’s inherent price swings.

The collective actions of Bank of America (BAC), Vanguard, and Fidelity represent a maturation in the relationship between traditional wealth management and the digital asset ecosystem. By providing structured allocation bands and covering mainstream ETFs, these institutions are moving crypto from the periphery of speculative investment into the realm of considered, thematic portfolio diversification. For the millions of clients served by these firms, the barriers to regulated, advised exposure to cryptocurrencies are falling rapidly, setting a new standard for the industry at large.