Vanguard’s turnaround this week erased the last major holdout. The company has opened its brokerage operations to third-party crypto ETFs and mutual funds related to BTC, ETH, XRP, and SOL, but still refuses to launch its own crypto funds or engage in Memecoin products.
The change is significant for the U.S., where Vanguard was the last major branded asset manager to completely ban bitcoin exposure through exchange-traded products.
Fidelity has its own spot BTC ETF and in-app retail crypto trading. Schwab offers spot Bitcoin fund and spot BTC ETF options and is preparing for full spot crypto trading by 2026.
Bank of America, Morgan Stanley, Wells Fargo and UBS now offer Bitcoin spot ETFs in their wealth channels, and BofA has even told advisors to keep their crypto allocations between 1% and 4%.
Among the national mass-market platforms that rank alongside Vanguard, the debate has shifted from the question of “to tolerate or not to tolerate.” “Which client, in what wrapper, and in what quantity?”
There are no outright Vanguard-style bans left for the big names. What remains are soft speed bumps, structural barriers built into how products are packaged, who is allowed to use them, and what defaults are applied when advisors and algorithms make allocation decisions.
These soft bans do not appear as policy statements, but they keep trillions of dollars of American retirement and insurance funds away from Bitcoin.
401(k) menu issues: Policies have changed, but the platform hasn’t.
One barrier lies in workplace retirement plans. The Department of Labor has rescinded its 2022 “extreme caution” warning and returned to a neutral position on cryptocurrencies in 401(k)s, but that doesn’t mean the menu has switched to being pro-Bitcoin.
Most plan sponsors do not yet offer spot BTC ETFs as a standard option. Barron’s points out that even after the policy change, Bitcoin ETFs remain “almost inaccessible to standard 401(k) plans.” Fidelity’s digital asset account allows employers to add Bitcoin to their 401(k), but only if the employer opts in and there is a cap on the allocation.
For most office workers, retirement savings remain not directly exposed to Bitcoin unless there is an intermediary or active sponsor.
The mechanism works as follows. Your benefit consultant will suggest a menu of 15 to 25 funds covering large-cap, small-cap, international stocks, bonds, and target-date strategies.
While a Spot BTC ETF is technically eligible, the inclusion of a Spot BTC ETF means that the plan fiduciary must affirmatively determine that Bitcoin is in the best interest of the participants and document that determination in writing.
Even though the DOL no longer specifies this, legal advisors and consultants are still telling fiduciaries that virtual currency in 401(k)s is risky and should be approached with caution.
The result is status quo bias. Unless someone at the sponsoring company actively promotes Bitcoin options, the menu will default to the same stock and bond lineup that has been in place for years.
It creates a structural mismatch. Retail investors using Robinhood or Coinbase are free to purchase Bitcoin in a taxable account. When those same people contribute to a 401(k), they are typically locked into a menu that achieves maximum value in a “growth” target date fund with zero crypto exposure.
Although the policy environment has moved towards neutrality, the infrastructure consisting of planning menus, record custodian integration, and fiduciary appetite has not kept up.
Risk tier gates and asset minimums: Who has access?
Another soft barrier is the gatekeeping of risk tiers on major wealth platforms. Morgan Stanley just recently dropped its requirement that clients be “active” investors with at least $1.5 million in crypto funds before they can access them. As of October, the company opened its crypto funds and ETFs to all high-net-worth clients, including retirement accounts.
Merrill Lynch still limits its Spot Bitcoin ETF to “qualified” ultra-high-net-worth clients (defined as those with around $10 million in assets). UBS only offers spot BTC ETFs to “eligible” high-net-worth clients, not all individual accounts.
Bank of America has gone the furthest in normalizing crypto allocations, directing advisors to add 1% to 4% to crypto allocations across Merrill and private banks. But that guidance is still framed for high-net-worth clients who already have a sizable portfolio with an advisor.
In practice, this means that the self-directed Robinhood-style crowd is free to buy Bitcoin ETFs, but many “mass affluent” households participating in traditional advice channels can only acquire cryptocurrencies if their advisor is comfortable and their risk score is high enough.
The difference depends not only on net worth, but also on which distribution channel the investor belongs to.
Users can get Bitcoin in one click for self-storage or trading through discount intermediaries. Investors in wirehouse managed accounts require advisor overrides and risk tolerance to clear internal compliance hurdles.
This hierarchy creates bifurcation even within the same company. At Morgan Stanley, self-directed E*TRADE customers can purchase BlackRock’s IBIT without restrictions. In contrast, the same firm’s wealth management customers required an aggressive risk rating and $1.5 million by October.
At Merrill, self-directed CMA retail clients have access to spot Bitcoin ETFs. Still, edge customers with smaller balances are being steered toward thematic stock funds and Bitcoin proxies like Coinbase and Strategies.
Product design and default assignments: Robonudge
Robo-advisors act as silent filters. Betterment and Wealthfront currently support Bitcoin and Ethereum ETFs, but these are typically offered as small satellite sleeves rather than core holdings.
Betterment’s “Crypto ETF Portfolio” is explicitly marketed as offering “limited exposure” via BTC and ETH ETFs, which typically represent a low single-digit percentage of the total portfolio.
Wealthfront treats Bitcoin and Ethereum ETFs as discretionary holdings and recently moved new flows to mainstream tickers such as IBIT and ETHA. The default portfolio still has a high proportion of stocks and bonds.
As a result, a typical handoff robo client will end up with little or no Bitcoin unless they actively override the default allocation.
This is important because robo-advisors are built around defaults. Most clients accept the recommended portfolio without any customization.
If the algorithm allocates 2% to the crypto sleeve and 98% to stocks and bonds, the client receives it. If the default is zero ciphers, most clients will have zero ciphers unless the client actively opts in.
Product type is also a partial barrier. At companies like Charles Schwab, customers can explore and buy crypto ETPs and themed stock ETFs, but direct spot trading for Bitcoin is still “not available at this time.”
Schwab plans to add spot trading for cryptocurrencies once the regulatory environment settles, with management aiming to launch around 2026. That’s fine if investors are happy with IBIT and other ETFs, but it’s still a structural nudge away from self-custody and toward wrapped exposure.
Insurance and pension channel: slowest lane
Insurance and pension channels are also slow areas. SECURE 2.0 and associated tax guidance encourage insurance companies to use ETFs in variable annuity special accounts. However, industry and law firm commentary still primarily views this in terms of traditional stock and bond ETFs rather than Bitcoin.
Major variable annuity platforms do not advertise Spot Bitcoin ETFs as standard subaccounts. The menu remains dominated by stocks, bonds, and target date strategies.
This effectively prevents trillions of dollars in insured retirement funds from leaving Bitcoin for now, even though there is nothing technically preventing insurance companies from adding Bitcoin ETF sleeves.
Variable annuities pool customers’ premiums and allocate them across subaccounts that track mutual funds or ETFs. The insurance company chooses which funds will be made available and the customer chooses from that menu.
Adding a Bitcoin ETF subaccount requires an insurance company to negotiate fees with the ETF issuer, clarify internal compliance, and determine that providing crypto exposure is in the interest of policyholders and will not trigger a regulatory blowback.
Most insurance companies have not yet made such a call, so the menu defaults to the same stock and bond subaccounts that have been available for decades.
Culture layer and compliance layer
Finally, there is the culture and compliance layer. Despite the DOL’s reversal, benefits attorneys and consultants are still telling plan fiduciaries that virtual currency in 401(k)s is legally risky and should be approached with extreme caution.
Barron’s and MarketWatch both point out that many advisors still view Bitcoin as speculative, and even when ETFs are available, they suggest allocations of just 1% to 3%, effectively acting as a de facto soft cap.
Some platforms continue to be structurally biased towards indirect exposure. Schwab’s cryptocurrency education focuses on ETPs and thematic stocks rather than direct coins, encouraging conservative customers to “pick and drop” and diversify their funds rather than owning BTC itself.
This is not visible in the product availability grid, but it is the layer that actually determines what happens.
A fiduciary could add a Bitcoin ETF to a 401(k) menu, but if a benefits consultant tells the board that doing so would increase scrutiny and litigation risk, the board may choose not to add it.
Advisors can recommend a 5% Bitcoin allocation, but if the compliance desk flags it as outside the client’s risk tolerance, the allocation will be reduced to 1% or removed entirely.
An end state is a market where Bitcoin is technically available everywhere, but is only available to clients who know that they actually demand it, have the risk tolerance to clear the compliance gates, and use a platform that treats cryptocurrencies as a core asset class rather than a speculative add-on.
There are no more large-scale blanket bans. What remains is the soft infrastructure of defaults, gates, and nudges that keep most of America’s retirement funds in the same stock and bond allocation as before.