Bank of America Allows Clients to Include Cryptocurrencies in Investment Portfolios
Bank of America, the US lending giant, announced that starting next month, its wealth advisors will be able to recommend cryptocurrency investments within client portfolios, marking a historic milestone for the digital asset sector. This move reflects the growing acceptance of cryptocurrencies by financial institutions and signals a significant shift in the official perception of digital assets in the US market.
Beginning January 5, advisors at Bank of America Private Bank, Merrill, and Merrill Edge will be authorized to suggest cryptocurrency exchange-traded products (ETPs) to clients, with no minimum asset requirement. While clients who met predefined thresholds have had access to Bitcoin ETFs since early 2024, this step represents a broader evolution in the advisor role, transitioning from simply executing cryptocurrency orders to providing strategic investment guidance.
Amid ongoing regulatory discussions in the US, cryptocurrencies have benefited from institutional adoption, enhancing their credibility with traditional investors. Many prefer holding cryptocurrencies through spot funds and ETPs due to higher liquidity, stronger security, and simpler regulatory compliance compared to directly managing digital assets. Chris Hayesy, Chief Investment Officer at Merrill Lynch and Bank of America Private Bank, stated, “For investors interested in digital innovations and comfortable with high volatility, allocating a modest 1% to 4% of their portfolio to digital assets may be a suitable option.”
Supporters of cryptocurrencies have long emphasized their value for portfolio diversification and as a hedge against inflation and traditional asset exposure, highlighting their potential in long-term investment strategies. However, critics caution about high volatility and security risks, noting that unprepared investors may face significant challenges in this asset class.
Notably, Bitcoin experienced a drop of over $18,000 in November, accompanied by record fund outflows, marking its largest monthly decline since May 2021. Merrill noted that “the relationship between adoption and long-term value is real but not guaranteed, and periods of excessive speculation can distort prices beyond the asset’s intrinsic value”.
