Bank of America is now on board. The second-largest bank in the United States is permitting advisors to recommend clients invest up to 4% of their wealth in bitcoin starting next year.
With this move, BofA follows in the footsteps of other major American banks that now recommend bitcoin and crypto investments. Read more below.
Bank of America Allows Crypto #
This marks a significant shift for the major bank. While Bank of America (BofA) previously allowed clients to invest in crypto, the bank’s wealth advisors never proactively recommended it. That’s about to change.
Starting in January, BofA’s policy will change and the bank will permit wealth advisors to recommend clients invest in bitcoin exchange-traded funds (ETFs).
According to Chris Hyzy, chief investment officer at BofA, the bank can recommend some clients invest one to four percent of their wealth in digital assets:
“For investors with a strong interest in thematic innovation and who are comfortable with increased volatility, a modest allocation of 1% to 4% in digital assets may be appropriate.”
That’s not a low percentage. Not long ago, financial service providers recommended at most one to two percent, but nowadays four percent appears to be becoming increasingly common. Hyzy states:
“The lower end of this range may be more suitable for investors with a conservative risk profile, while the higher end may be better suited for investors with greater tolerance for total portfolio risk.”
Bitcoin ETFs Gaining Popularity #
Initially, this concerns investments in crypto ETFs. These are investment funds that invest in bitcoin, allowing stock market investors to invest through traditional stock exchanges.
They were first launched two years ago, including by asset management giant BlackRock, and have proven to be a great success since. BofA says the new policy responds to growing demand for crypto among clients.
The timing of BofA’s turnaround is notable. The news followed just hours after asset manager Vanguard, after years of resistance and criticism, also announced it will now allow clients to invest in crypto ETFs.
Morgan Stanley, JPMorgan Chase, Charles Schwab, and Fidelity also now sometimes advise their clients to invest in crypto.