From Execution to Recommendation: Bank of America Breaks Asset Barrier, Allows Advisors to Recommend Cryptocurrency ETPs.

On Thursday, Bank of America announced that starting from next month, it will allow its wealth advisors to recommend clients to allocate their portfolios to cryptocurrencies, which is a milestone moment for the digital asset industry. Beginning on January 5th next year, advisors from Bank of America Private Bank, Merrill, and Merrill Edge will be able to recommend a variety of cryptocurrency exchange-traded products (ETPs) to clients, with no asset threshold required. The bank stated that starting in early 2024, clients with assets meeting certain thresholds will be able to invest in Bitcoin ETFs; while this latest move is shifting the role of advisors from simply executing cryptocurrency transactions to providing asset allocation advice. With US President Donald Trump continuing to push for loosening regulations on this asset class, cryptocurrencies are benefiting from widespread acceptance by institutional investors. Many investors prefer to hold cryptocurrencies through ETFs and ETPs because compared to directly managing underlying assets, this method offers higher liquidity, greater security, and simplified compliance procedures. Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank, said: "For investors who are interested in thematic innovation and can tolerate high volatility, allocating 1% to 4% of assets to digital assets may be appropriate." Supporters of cryptocurrencies have long viewed them as a hedge against inflation and a tool to diversify risks of traditional assets. However, critics warn that this asset class is volatile and carries security concerns. In November, the Bitcoin market experienced a sharp downturn, with the price dropping significantly over a month, exceeding $18,000. At the same time, funds flowed out of the market on a record scale, marking the largest monthly dollar decline since the cryptocurrency crash in May 2021. Merrill explicitly stated in its report: "While there is some correlation between adoption levels and long-term value, this relationship is not certain; during speculative overheating phases, asset prices may far exceed the value corresponding to their true utility."