Bank of America Joins Major Institutions Recommending 1-4% Bitcoin Allocation for Wealth Clients

Major Bank Updates Investment Guidance

Bank of America has updated its portfolio guidance to recommend a 1% to 4% allocation to Bitcoin and digital assets for wealth management clients across its Merrill, Bank of America Private Bank, and Merrill Edge platforms^[2]. The move marks a significant shift in how traditional financial institutions are approaching cryptocurrency investments for retail and high-net-worth clients.

"For investors with a strong interest in thematic innovation and comfort with elevated volatility, a modest allocation of 1% to 4% in digital assets could be appropriate," said Chris Hyzy, chief investment officer at Bank of America Private Bank^[2]. He emphasized that the firm's approach highlights regulated investment vehicles and risk-aware allocation practices.

Formal ETF Coverage Begins

Beginning January 5th, Bank of America's chief investment office will include four Bitcoin exchange-traded funds in its coverage universe: the Bitwise Bitcoin ETF (BITB), Fidelity's Wise Origin Bitcoin Fund (FBTC), Grayscale's Bitcoin Mini Trust (BTC), and BlackRock's iShares Bitcoin Trust (IBIT)^[2].

The designated allocation range depends on an investor's risk profile, with Hyzy stating that "the lower end of this range may be more appropriate for those with a conservative risk profile, while the higher end may suit investors with greater tolerance for overall portfolio risk"^[2].

Previously, clients could only access Bitcoin and crypto-related products by request, which restricted advisers from proactively discussing them with most investors^[2]. "This update reflects growing client demand for access to digital assets," said Nancy Fahmy, head of Bank of America's investment solutions group^[2].

Industry-Wide Allocation Frameworks Emerging

Bank of America's guidance aligns with allocation frameworks from several other major financial institutions. Morgan Stanley suggested in an October note that investors might consider allocating 2-4% to Bitcoin and crypto, describing it as a "speculative but increasingly popular asset class"^[2]. BlackRock has outlined a 1-2% allocation for Bitcoin, while Fidelity earlier recommended 2-5%, with a higher range proposed for younger investors^[2].

Access to Bitcoin and crypto-related products has recently expanded across the brokerage industry. Bloomberg reported that Vanguard will begin allowing Bitcoin ETFs and mutual funds on its platform^[2]. Firms including Morgan Stanley, Charles Schwab, Fidelity, and JPMorgan Chase currently allow customers to invest in specific Bitcoin ETFs^[2].

Regulatory Backdrop

The institutional shift toward cryptocurrency comes as the regulatory landscape continues to evolve. Former SEC Chair Gary Gensler, who led the agency from April 2021 to January 2025, recently separated Bitcoin from other cryptocurrencies, calling most crypto "highly speculative"^[1]. During his tenure, Gensler oversaw an aggressive enforcement agenda that included lawsuits against major crypto intermediaries and the view that many tokens are unregistered securities^[1].

On the topic of Bitcoin ETFs, Gensler noted that during his tenure, the first US Bitcoin futures ETFs were approved, tying parts of crypto's infrastructure more closely to traditional markets^[1]. He observed that finance "ever since antiquity… goes toward centralization," making it unsurprising that an ecosystem born decentralized has become "more integrated and more centralized"^[1].

Some institutions are awaiting congressional action on federal Bitcoin and crypto legislation that would define regulatory responsibilities before fully expanding into custody, trading, or broader digital-asset services^[2]. The broader shift across the banking sector follows recent federal policy changes affecting how U.S. financial institutions may engage with Bitcoin and digital assets^[2].