Wall Street FOMO erupts! Bank of America and Morgan Stanley rush to promote Bitcoin ETFs igniting a banking war

U.S. banking FOMO sentiment ignited. Bank of America recommends wealth management clients allocate 4% to digital assets, and Morgan Stanley immediately filed for Bitcoin and Solana ETFs. This bank, managing $1.6 trillion, is expanding its investment channels through regulated tools, and regulatory clarity is pushing cryptocurrencies from niche experiments to mainstream finance.

The Three Major Triggers of the FOMO Wave

Wall Street’s FOMO sentiment did not erupt suddenly but is the result of multiple factors working together. First is the clarification of regulatory policies. Updated guidance from the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation now permits banks to custody crypto assets, facilitate trading, and offer digital asset services. This trend of clarity encourages traditional institutions to publicly announce their cryptocurrency products rather than remain passive spectators.

Second is the explosive growth in institutional demand. In early December, U.S. banks announced they would start covering four Bitcoin ETFs from January 5, 2026, including BITB, FBTC, Grayscale Mini Trust, and IBIT. This marks a clear recognition of cryptocurrencies as a legitimate component of diversified investment strategies. Morgan Stanley’s filing of S-1 registration documents further reflects Wall Street firms turning regulatory filings into concrete actions, rather than passive experimentation.

Third is competitive pressure. When one bank begins offering crypto services, others risk losing clients. This FOMO mindset forces banks to accelerate their布局 to avoid falling behind in this financial innovation race. Eric Trump recently wrote: “In just four months, we built one of the fastest-growing and strongest Bitcoin companies globally. American Bitcoin has risen to the 19th largest public Bitcoin vault worldwide.” Such rapid rise cases intensify the urgency within the banking industry.

The Key Battlegrounds in U.S. Banking Competition

Wall Street’s FOMO race is unfolding across three main battlegrounds. The first is custody services. U.S. Bancorp has resumed providing Bitcoin custody services for institutional managers, including ETF custody. Vice Chairman Stephen Philipson stated in September: “With clearer regulatory policies, we have expanded our services to include Bitcoin ETFs.” BNY Mellon is also protecting BTC and ETH assets through dedicated platforms, becoming a pioneer in custody.

The second battleground is trading and investment tools. Goldman Sachs has a dedicated cryptocurrency trading division and is reintroducing channels for institutional clients to access the crypto market. Charles Schwab announced plans to offer direct trading of Bitcoin and Ethereum on its platform, and PNC Bank has partnered with Coinbase to enable seamless crypto trading for its clients. While Citigroup is still in early stages, it has expressed interest in exploring custody and trading services.

The third battleground is innovation in crypto-native products. State Street is developing stablecoins and tokenized assets, including bonds and money market shares. This indicates banks are exploring beyond trading and custody into crypto-native financial products. JPMorgan has long been active, launching JPM Coin—a bank-issued token designed to facilitate blockchain-based payments.

The Rise of Professional Crypto Banks

Anchorage Digital: The first federally chartered crypto bank in the U.S., focusing on institutional custody and blockchain services

Cross River Bank: Insured by the FDIC, partnering with Coinbase to facilitate crypto trading via API

Custodia Bank: Licensed in Wyoming, providing professional crypto services, reflecting a banking ecosystem designed specifically for digital assets

The success of these specialized institutions further fuels traditional banks’ FOMO, worried about losing influence in emerging financial infrastructure.

From FOMO to Normalization: The Turning Point

Wall Street’s FOMO mindset is creating a turning point, pushing cryptocurrencies from the fringe to the center. The trend is clear: custody and institutional products represent the first wave of adoption, followed by wealth management and ETFs, and finally, banks establishing partnerships with exchanges to enter the market without building full internal infrastructure.

These two developments—U.S. banks’ 4% allocation recommendation and Morgan Stanley’s ETF filings—show how traditional financial institutions are responding to market FOMO by competing to offer crypto services. As regulatory certainty increases, more institutions are expected to follow suit, further solidifying cryptocurrencies’ position in mainstream finance. Banks’ strategies have shifted from “whether to participate” to “how to scale quickly,” and this mindset shift is itself the strongest evidence of crypto mainstreaming.