Banks restrict Bitcoin ETF access to limit exposure to crypto, while freely trading customer funds in crypto investments.

Banks restrict Bitcoin ETF access to limit exposure to crypto, while freely trading customer funds in crypto investments.

Banks across the United States are restricting access to Bitcoin exchange-traded funds (ETFs), according to a recent report by Tephra Digital. The report, which was cited by venture capitalist and U.S. "Crypto and AI Czar" David Sacks, revealed that over $31 trillion in U.S. wealth platform capital remains either restricted or prohibited from investing in Bitcoin ETFs [1].

Sacks noted that the current restrictions are a form of "debanking," a term referring to the practice of cutting off or limiting access to crypto-related services. The report found that $10.3 trillion is fully prohibited from investing in Bitcoin ETFs, while $20.8 trillion is restricted by factors such as account type, investment caps, or net worth requirements. Major platforms such as Vanguard, Edward Jones, AllianceBernstein, Citi, Ameriprise, and T. Rowe Price prohibit Bitcoin ETF access entirely [1].

Meanwhile, some banks have taken small steps toward integration, but custody services remain limited, and many continue to impose barriers. For instance, Morgan Stanley, JPMorgan, Goldman Sachs, Wells Fargo, UBS, and Raymond James allow only limited access to Bitcoin ETFs, often to high-net-worth clients or through specific account types [1].

In contrast, banks are freely trading customer funds in other crypto investments. This disparity has led to criticism, with some calling it a form of "ideological debanking" by banks against the crypto industry. President Donald Trump signed an executive order targeting this practice, removing "reputational risk" as a valid reason for banks to terminate customer relationships [1].

The trend is not limited to the U.S. Harvard University recently invested $117 million in BlackRock’s iShares Bitcoin Trust (IBIT), surpassing its stake in Alphabet. This move reflects growing institutional adoption of regulated crypto assets [2]. Other universities, such as Brown and Emory, have also allocated funds to Bitcoin ETFs, signaling a broader shift toward digital asset diversification in institutional portfolios [2].

This shift highlights the increasing legitimacy of Bitcoin as a strategic asset class. While direct Bitcoin ownership carries volatility and regulatory uncertainty, spot Bitcoin ETFs offer a transparent, exchange-traded alternative that aligns with compliance and governance standards [2].

References:
[1] https://finance.yahoo.com/news/white-house-crypto-czar-harsh-211027456.html
[2] https://www.ainvest.com/news/bitcoin-news-today-harvard-allocates-117m-blackrock-bitcoin-etf-surpassing-stake-alphabet-2508/