Bank of America, Wells Fargo offer access to bitcoin ETFs

Bank of America's Merrill Lynch and Wells Fargo's brokerage division are offering wealth management clients access to exchange-traded funds tied to the spot price of bitcoin, highlighting the growing focus on cryptocurrency across the banking industry.

The two banks have been extending the approved ETFs to brokerage clients who specifically request access since the products were greenlit by the Securities and Exchange Commission in January, as reported by Bloomberg last week. The price of bitcoin, more than $65,000 as of Monday, has continued to rise since late January's valuation of ~$40,000 per coin and recently broke its all-time high of $68,999 on Tuesday.

Representatives from Wells Fargo confirmed that spot bitcoin ETFs are available for unsolicited purchases — those brought to a broker by a client rather than the other way around — through an advisor with Wells Fargo Advisors or through the bank's online WellsTrade platform. A representative for Bank of America declined to comment.

Shortly after the SEC's decision, many trading platforms like Robinhood quickly pivoted to allow customers interested in the products to begin trading as soon as the next day. UBS was also in the wave of companies flocking to the newly-approved index funds.

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Other banks and investment firms, however, have been resistant to the allure of cryptocurrency in favor of more tried-and-true financial products.

Janel Jackson, global head of ETF Capital Markets and Broker and Index Relations for the registered investment advisory firm Vanguard, said the company has no plans to launch its own ETF or support the future purchase of crypto-related products through its brokerage platform.

"In Vanguard's view, crypto is more of a speculation than an investment. … This is at the root of our decision to not offer crypto products, whether our own or others," Jackson said in a January blog post. Clients can still keep and sell currently-owned crypto investments.

Despite Vanguard standing fast on cryptocurrency, Jackson said the company is interested in the underlying blockchain technology supporting digital asset trading and is "actively involved in research" to employ the technology.

The introduction of the spot bitcoin ETFs alongside traditional ETFs has crypto experts and asset managers alike curious to see if banks will continue to bring digital assets into the world of traditional finance or venture further into the crypto markets.

Annabelle Huang, managing partner for the global digital asset investment firm Amber Group, said that with the ETF "legitimizing bitcoin as an asset class and blockchain as the underlying tech," both situations are plausible at the same time.

"As we see more embracement in the traditional finance space towards crypto assets and blockchain [technology], I think we'll also see more real-world assets on chain. … We started with stablecoins and a lot of the Wall Street banks are already experimenting with it," Huang said during a panel discussion at the ETHDenver conference held in Colorado last week.

Morgan Stanley, the New York-based investment bank, is another organization currently evaluating whether or not to offer clients access to spot bitcoin ETFs, as reported last week by CoinDesk. Representatives from the bank declined American Banker's request for comment.

Given the regulatory hurdles needed for spot bitcoin ETFs to be approved, the SEC's January decision took many by surprise. The agency's ongoing tug-of-war with lawmakers and banking leaders to amend its safeguarding rules further skewed the likelihood of the ETFs.

The proposal, released in February 2023 by SEC Chair Gary Gensler, seeks to extend the agency's rules for investment advisors to cryptocurrencies and require qualified custodians to separately secure clients' cash from their digital-asset holdings. Regulators with the Office of the Comptroller of the Currency and Federal Reserve argued that if enacted, new guidelines would make custody banking more difficult — and expensive.

"As Wall Street slowly starts to see the addressable market of crypto, which is global and in some ways much larger than the institutional investor market, then they'll start bringing more and more of these structured [real world assets] on chain," said Ryan Rasmussen, senior research analyst for the crypto index fund managerial firm Bitwise Asset Management. Bitwise's spot bitcoin ETF was one of the 11 approved in January.

Some players in the crypto custody space have worked to bridge the gap between the markets and institutional investors seeking to engage with digital assets. Anchorage Digital launched its self-custody wallet for institutions last month, allowing access to more than 200 currencies like Aptos, Sui and bitcoin.

As consumer interest in spot bitcoin ETFs continues to grow, banking executives are paying close attention to the next steps.

"ETFs are where we are taking crypto and providing it as a traditional finance instrument, and in the [converse] way, we are looking at tokens where you can take different types of things and move it back into decentralized finance," said Krishnan Nair, vice president of product management for the Swiss cryptocurrency firm 21.co.