Wall Street Goes Crypto: Bank of America Tells Clients to Allocate up to 4% to Digital Assets

Bank of America has started advising its clients to include digital assets in its portfolio. This comes at a time when the institutional adoption of crypto continues to increase on Wall Street.

Bank of America Signals Strategic Shift Toward Crypto

The bank has begun to advise its clients to dedicate between 1% and 4% of their investment portfolios to Bitcoin and other cryptocurrencies. Starting January 5, financial advisors at the Bank of America Private Bank, Merrill, and Merrill Edge will advise clients to invest in specific ETPs in the crypto markets with no minimum assets.

With this, financial advisors are also able to serve as actively involved portfolio managers rather than simply executing orders for cryptocurrencies. Chris Hyzy, Chief Investment Officer of Merrill, believes that a small investment might work for most people.

“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,” he said.

They provide exposure without the risks involved in self-custody solutions. This is why these solutions are so popular with traditional investors.

This follows a reduction in the regulatory tension on the investment class. With U.S. President Donald Trump supporting a less rigorous regulatory environment, the adoption of the investment class by financial institutions has increased. However, Bank of America has advised clients that market volatility still defines the investment class.

The link between adoption and long-term value is real but not guaranteed, and periods of speculative excess can distort prices far above true utility,” Merill said.

Notably, Bank of America had been working with other entities such as Citi and Goldman Sachs to come up with digital tokens representing major global currencies.

Institutional Adoption Accelerates Across the Sector

A landmark regulatory decision has also given momentum a boost. The Office of the Comptroller of the Currency OCC recently gave the green light to including select crypto assets on U.S. bank balance sheets. These include Bitcoin, Ethereum, Solana, and XRP. Banks are also allowed to use these approved assets to pay blockchain network fees.

The development has opened ways for national banks to hold assets directly and then use it for settlement.

Deutsche Bank also intends to roll out its crypto-custody service later in the year through a collaboration with the technology division of Bitpanda. Simultaneously, the corporate banking division of the bank reaffirms commitment to collaboration with Taurus SA in developing digital asset custody infrastructure.

To add, PNC Bank became the first major US bank to provide eligible customers direct Bitcoin spot trading services. The platform now allows customers to buy, sell, and hold Bitcoin.