Bank of America recommends Bitcoin and crypto to customers for the first time
- For the first time, Bank of America is recommending its customers an allocation of one to four percent in crypto assets such as Bitcoin.
- One of the world’s largest banks is apparently in the process of integrating digital assets into its wealth management offerings.
Bank of America’s recommendation refers to the total value of the individual customer portfolio, not to liquid assets or pure risk capital. The bank is thus elevating digital assets such as BTC to the same status as classic investments that are traditionally used for diversification.
Why just four percent?
The BoA justifies its recommendation with an improved return that is adjusted to the risk. Internal analysis showed that a small admixture of Bitcoin can increase the ROI of a portfolio without disproportionately increasing risk.
The bank also points to continued high customer demand for regulated crypto products, which has increased significantly since the approval of Bitcoin ETFs. At the same time, digital assets are seen as increasingly secure against inflation, devaluation and economic risks.
With inclusion in the official “House View,” Bitcoin ETFs will now be integrated into rebalancing processes, risk models and reporting systems – elements that are well known to institutions. This increases and consolidates their acceptance of the new asset class.
Not a model for Germany
It is currently difficult to directly apply the 4% recommendation to German conditions. The regulatory framework differs too much because BaFin assesses the risk classification of crypto assets much more conservatively than the responsible US authorities.
In addition, many banks in Germany can currently only offer their customers ETNs, certificates and funds. There is no official portfolio recommendation from any bank in Germany, and many banks still only make crypto investments at the express request of their customers.
Nevertheless, Bank of America’s strategic logic will sooner or later be applicable to the German market. The arguments in favor of a small but structurally sensible admixture are also gaining importance in Europe.
As soon as fully regulated Bitcoin ETFs arrive in German retail banking and the internal risk models are adjusted, the one to four percent diversification in crypto investments should also be introduced here and in Austria.
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