Starting January 5, 2026, Bank of America will allow advisors across Merrill, Bank of America Private Bank, and Merrill Edge to recommend crypto exchange-traded products, with suggested allocations typically in the 1% to 4% range for clients who can tolerate volatility.

According to Reuters reporting on the policy change, this marks a clear move away from the previous posture where crypto exposure was largely handled as "client-requested only."

That number, 1% to 4%, is not aggressive. The real story is that a legacy wealth machine is formalizing crypto inside the advisory process, which changes distribution dynamics more than most headlines admit.

The Policy Change That Matters More Than the Percentage

For years, the practical constraint inside large banks was not whether a client could buy exposure. It was whether an advisor could proactively treat it as part of a portfolio conversation without stepping outside internal rules. That's a major difference in how capital actually moves.

Bank of America is now letting advisors recommend crypto ETPs across three major channels. This sounds procedural, but it's precisely how "new" assets become normalized: first as a request, then as an option, then as a model allocation.

The bank's reported guidance frame, a modest 1% to 4%, also fits traditional risk budgeting. In a standard multi-asset portfolio, that band is big enough to matter in upside scenarios, but small enough that a drawdown does not destroy the overall plan. Banks do not sell conviction. They sell survivability. This shift looks designed for that exact purpose.

Why Now and Why It's Not About Hype

The timing is not random. Regulated wrappers changed the conversation. Bitcoin ETFs like BlackRock's IBIT and Fidelity's FBTC let banks offer exposure without asking clients to manage wallets, private keys, or offshore exchange risk. That doesn't make the asset safer, but it makes the operational pathway cleaner for institutions.

The change comes amid broader institutional re-engagement with digital assets, supported by a more permissive political and regulatory tone in the U.S. through 2025. It's less "Bank of America turned bullish" and more "the compliance map shifted enough that the bank can finally meet demand at scale."

There's also a second layer: competition. When one major institution upgrades crypto access from "allowed" to "advisable," peers watch closely. BBVA's private banking arm has already recommended crypto allocations on a risk-adjusted basis to wealthy clients. Morgan Stanley began offering Bitcoin ETF access to wealth management clients in 2024. Even if Bank of America is more conservative, it cannot ignore the direction of travel.

The banking playbook is consistent across cycles: follow client demand, wrap it in guardrails, then present it as prudent diversification. Whether the underlying asset deserves that label is a separate debate.

The Uncomfortable Counterargument

A skeptical read is straightforward. This policy change does not "validate" crypto fundamentals. It validates that client demand is persistent enough to justify a controlled product shelf.

Crypto is still a volatility machine. Bank of America itself highlighted risks around speculative activity pushing prices away from utility, and pointed to sharp drawdowns as evidence that this is not a stable asset class. The bank is not removing the warning label. It is simply putting the product in the advisor toolkit.

There's also a structural issue markets tend to ignore during "adoption" headlines: concentration and liquidity dynamics. Large flows into a narrow set of vehicles can create crowded positioning and reflexive price behavior. If the dominant on-ramp becomes ETFs and ETPs, price can become more sensitive to macro risk-off events, not less.

Advisory approval increases distribution, but it also increases correlation with the broader financial system. That is not automatically bullish. It can also mean sharper, faster drawdowns when portfolios de-risk.

What to Watch Next

This story won't be decided by a press line. It will be decided by implementation details and client behavior.

First, which products get emphasized. "Crypto ETPs" can mean Bitcoin-heavy exposure, diversified baskets, or thematic products. The difference matters. A 2% Bitcoin ETF allocation is not the same as a 2% basket that includes thin, narrative-driven tokens.

Second, how model portfolios evolve. If the 1% to 4% guidance becomes embedded in standardized risk profiles, it can create steady, rules-based demand. That's meaningful, but it's also slow money, not headline money.

Third, what happens in the next real drawdown. The first stress test is always the same: does the bank maintain the policy when crypto volatility spikes and clients complain? The institutional "yes" only becomes durable after the first uncomfortable quarter.

The market will treat this as a bullish stamp. A more disciplined read is that it's a distribution upgrade, not a thesis upgrade. It brings crypto closer to the mainstream portfolio conversation, but it doesn't solve the asset's core issues: unstable valuation anchors, narrative cycles, and drawdowns that can violate client suitability if position sizing is sloppy.

Bank of America is not telling clients to bet big. It is telling advisors they can stop pretending the category doesn't exist.