World’s second-largest bank urges clients to add crypto exposure

Big banks are finally going all in on crypto. This time, one of the Big Four banks in the United States has stepped into the conversation as crypto ETFs gain momentum.

Bank of America, the world's second-largest bank in terms of market cap, has been showing steady interest in the world of crypto.

Back in February, the banking giant said it was preparing to launch its own stablecoin once regulations allow it, as per CEO Brian Moynihan.

Now, a new note shows the bank is advising its clients to consider crypto allocation in their portfolios.

Bank of America advises exposure to crypto

In a recent note, Bank of America is advising its wealth management clients to consider a 1%-4% allocation to digital assets, marking one of the bank’s clearest endorsements of crypto to date.

The guidance applies across Merrill, Bank of America Private Bank, and Merrill Edge platforms, with the firm set to begin coverage of four Bitcoin (BTC) exchange-traded funds (ETFs) in January, as reported by Yahoo Finance.

The CIO team will begin covering the following Bitcoin ETFs on Jan. 5:

• Bitwise Bitcoin ETF (BITB)
• Fidelity Wise Origin Bitcoin Fund (FBTC)
• Grayscale Bitcoin Mini Trust (BTC)
• BlackRock iShares Bitcoin Trust (IBIT)

“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,” Chris Hyzy, chief investment officer at Bank of America Private Bank, said in a statement.

Hyzy added that the “lower end of this range may be more appropriate” for conservative investors, while a higher allocation may fit portfolios with greater risk tolerance.

Until now, Bank of America’s wealth advisers could only discuss crypto products at a client’s request. The new framework allows advisers to actively recommend exposure rather than waiting for inbound inquiries.

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BAC joins JPMorgan, Citi in crypto offerings

Bank of America’s shift aligns with a growing trend among major financial institutions expanding their crypto offerings.

JPMorgan, which has lately been in hot water with the crypto community, has taken its own careful steps into the world of crypto. 

In November, the bank launched its blockchain-powered deposit token, JPM Coin (JPMD), for institutional clients. 

It later filed a structured investment product linked to BlackRock’s iShares Bitcoin Trust (IBIT). According to the filing, the note offers investors potential “uncapped” upside if Bitcoin rallies significantly through 2028.

Citi is building a crypto custody service with plans to launch by 2026. Biswarup Chatterjee, global head of partnerships and innovation for Citi’s services division, told CNBC on Oct. 13 that the bank has spent “two to three years” developing the infrastructure for the service.

Morgan Stanley has also expanded its crypto access. In October, the firm said advisers may now offer crypto products to all wealth management clients, regardless of net worth or risk tolerance. Previously, access required at least $1.5 million in assets, a high-risk profile, and a taxable brokerage account.

Related: America's oldest bank will now custody Ripple's stablecoin