BofA Open to “Rethink” of Crypto Investing Ban: CEO
Cryptocurrencies have been getting a little more love from the wirehouses lately.
“We’re always looking at what’s going on in the market to understand … do we need to rethink our position,” Moynihan told shareholders at an annual meeting held Tuesday morning.
Moynihan’s comments come on the heels of Morgan Stanley telling its brokers in an internal memo last month that it was launching access to three funds that enabled bitcoin ownership, a firm spokeswoman confirms. It was the first of the country’s six largest banks to provide access to customers at the time, according to reports.
Morgan Stanley unveiled and then launched at the end of March access to three funds, which provide investors with a path to bitcoin ownership, although it limits those funds to its wealthier clients with at least $2 million in assets at the firm, the spokeswoman confirms.
“It’s a fast growing space,” Jonathan Pruzan, Morgan Stanley chief financial officer, said about cryptocurrency-based assets while speaking to stock analysts during the earnings call last week. “There’s a lot of interest in the space. And we had significant interest from our wealth clients to try to get access to this new asset class.”
Lisa Shalett, chief investment officer and head of the Morgan Stanley Wealth Management Global Investment Office, wrote in an investors’ advisory published in March that a “threshold is being reached” in terms of the viability of bitcoin as a diversifier in client portfolios.
JPMorgan Chase & Co. floated in late February the idea of investors using Bitcoin as a way to diversify their portfolios. JPMorgan strategist touted cryptocurrency as a hedge against fluctuations in stocks, bonds and commodities but recommended small allocations, around 1% of a portfolio.
Officially, BofA and Merrill’s policy is to: “not lend against cryptocurrencies,” not to provide bank services for “companies whose primary business is cryptocurrency, or facilitate cryptocurrency trading and investment,” a Merrill spokeswoman confirmed Tuesday.
Self-directed MerrillEdge investors could still circumvent the BofA’s bans by investing indirectly in blockchain technology—which is what’s behind the cryptocurrencies—buying into either or both individual stocks and ETFs that are heavily invested in related products and services.
At the shareholders’ meeting, Moynihan shared that the bank itself has embraced blockchain technology and indeed applied for “several hundred” patents for blockchain-applied technology solutions for its Treasury and transactions-related services.
“We think there’s usefulness of blockchain and other scenarios like that, where there’s information and money moving,” Moynihan said.
In another example of increasing crypto appetites in wealth, San Francisco-based First Republic Bank’s president Hafize Gaye Erkan said last week that it is “assessing” the costs of expanding the platform and reporting technology to allow customers in its Private Wealth Management to purchase crypto assets.
“Given our foundation of safety, soundness, and rapid pace of the industry evolution they’re approaching it very methodically and conservative while accommodating our clients,” Gaye Erkan said.
Customers of the firm’s roughly 200 brokers are able to buy crypto-related funds through brokerage accounts and not in advisory accounts subject to a stricter fiduciary standard of care, she said.
Outside of questions about crypto, Moynihan was also asked at the Bank of America shareholders’ meeting about MerrillEdge’s decision in January to restrict trading in GameStop shares, during the height of its volatility.
“We did it to protect customers,” he said.
BofA increased margin requirements to 100% for traditional Merrill Lynch and MerrillEdge to trade GameStop, which were on the social media-driven wild ride at that time, Bloomberg reported.
As if anyone suspected otherwise, Moynihan also made clear to shareholders that several more months will pass before BofA and Merrill Lynch employees stop working under pandemic-triggered remote conditions.
BofA would have “more normal operating posture” in terms of remote working after Labor Day, Moynihan said.