Morgan Stanley sets 4% crypto cap for ‘opportunistic’ portfolios, aligning with BlackRock, Grayscale

Morgan Stanley's Global Investment Committee has recommended capping cryptocurrency allocations at up to 4% in its most aggressive client portfolios, the bank said in an Oct. 1 note. The guidance adds to Wall Street’s changing tune on how digital assets should fit into traditional multi-asset portfolios.

The firm categorized crypto as a "speculative and increasingly popular" real asset, comparable to digital gold, and suggested allocations between zero and 4% depending on risk profile.

Conservative and income-focused investors were advised to avoid the asset class altogether, while "opportunistic growth" portfolios could include up to 4%.

The committee also urged regular rebalancing to prevent swelling positions during rallies, citing the potential for "greater drawdowns and outsized volatility."

The approach puts Morgan Stanley alongside other major asset managers that have begun to publish crypto allocation frameworks. BlackRock has previously described a 1% to 2% weighting in bitcoin as a "reasonable range," while Grayscale modeling points to an optimal allocation closer to 5%.

Fidelity, meanwhile, already supports crypto exposure through IRAs and spot ETPs and has published research suggesting allocations of 2% to 5% could add value under bullish adoption scenarios.

Others are more cautiously optimistic. Schwab has not published any crypto allocation guidance but offers access to crypto ETFs while planning to roll out spot bitcoin and ether trading in 2026.

Resistance easing

Some firms remain resistant, though even that may be shifting.

Vanguard has long taken one of the hardest lines against crypto, blocking trading of spot bitcoin ETFs on its brokerage platform and repeatedly warning the asset class is "immature" and unsuitable for long-term investors. Former CEO Tim Buckley said Vanguard would never launch a bitcoin fund, echoing founder Jack Bogle’s warning to avoid it "like the plague."

But reports from last week said Vanguard is weighing whether to allow trading of crypto-focused ETFs on its platform, a move that would mark a major softening of its stance.

A spokesperson said the firm is "continuously evaluating" investor demand and the regulatory environment. The debate comes under new CEO Salim Ramji, a BlackRock veteran viewed as more open to digital assets than his predecessors.