Asset managers add crypto to client portfolios

Asset managers are adding cryptocurrency exposure to client portfolios through regulated products rather than using firm balance sheets. Firms offer spot bitcoin and ether ETFs, tokenized funds, actively managed digital asset funds, direct holdings with qualified custodians, equity stakes in crypto companies and venture investments in blockchain startups.

Managers are packaging crypto so clients can hold it inside brokerage, retirement and advisory accounts with custody, reporting and compliance controls. Spot bitcoin ETFs hold actual bitcoin with a qualified custodian and trade on regulated exchanges. BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) are among the largest. Combined spot bitcoin ETF assets peaked near $147 billion in late 2025 and fell to about $73 billion by mid-2026. IBIT held roughly 730,000 bitcoin as of mid-2026.

Other offerings include tokenized funds that record shares on blockchains, staking-enabled products that pass through rewards from proof-of-stake networks, and token baskets or crypto-industry equity ETFs. Franklin Templeton operates a tokenization platform called BENJI and BlackRock runs a tokenized BUIDL fund. VanEck and Bitwise have multi-token products; VanEck launched the first U.S. spot BNB ETF in June 2026.

Product development has been driven by investor demand for regulated, custody-backed access without self-custody, competitive pressure after early large ETF launches in 2024, and maturing market infrastructure such as qualified custodians, prime brokerage services, audited statements and ETF creation-redemption mechanics. A joint interpretation by the SEC and CFTC in March 2026 classified major tokens including bitcoin and ether as commodities. Congress approved a federal stablecoin framework in July 2025 while broader crypto legislation had not passed by mid-2026.

Managers control risk through position sizing, custody arrangements and formal compliance programs. Most disclosed allocations are low single-digit percentages of a portfolio, with many banks and wealth teams suggesting allocations of 1% to 5% for client portfolios. Common custody providers used by managers include Coinbase Custody, BitGo, Anchorage Digital and Fidelity Digital Assets. For ETF investors, the issuer’s custodian holds the underlying assets and manages the keys, removing the need for client self-custody.

Market volatility and operational risks remain. Bitcoin rose to about $126,000 in October 2025 and then fell roughly 50% by mid-2026, a swing that coincided with a sharp decline in ETF assets. Managers also face custody risk, technology failures from 24/7 trading, and reputational exposure when conservative clients see large drawdowns.

Large diversified managers have scale that can attract substantial flows: the 500 largest asset managers oversaw about $140 trillion at the end of 2024 and BlackRock passed roughly $14 trillion by the end of 2025. Most firms continue to treat digital assets as a small, higher-volatility sleeve inside client portfolios while expanding product lines and monitoring regulatory developments and client demand.