CryptoSlate
BlackRock cut the minimum for converting privately held Bitcoin directly into shares of its iShares Bitcoin Trust (IBIT) from $25 million to $1 million in July, a 96% reduction that puts the institutional in-kind route within reach of family offices and wealthy clients who previously could not commit enough coins to justify the process. Bitwise made an even steeper cut, taking the floor for its BITB fund from $100 million through an interim $50 million step to $3 million, a 97% drop. BlackRock told Bloomberg its in-kind program has already processed more than $5 billion, and Morgan Stanley and Galaxy separately trimmed a related lending minimum from $25 million to $5 million, saying onboarding can be shortened by as much as 75%.
Why it matters
In-kind creations let a holder deposit Bitcoin directly into an ETF trust in exchange for shares, sidestepping the sale, wire, and repurchase sequence that adds execution cost and can trigger a taxable event. The SEC's July 2025 approval of in-kind creations and redemptions for crypto exchange-traded products removed the original cash-only restriction, and the latest threshold cuts suggest the authorized-participant route is moving from a bespoke whale service into repeatable wealth-management plumbing. BlackRock's head of digital assets, Robbie Mitchnick, told Bloomberg that kidnappings, ransom demands, and custody failures motivate some holders to move coins into the fund; the company has not broken out motive, but Chainalysis documented 46 violent crypto incidents through late June and CertiK counted 52 verified incidents in the first half with home invasions jumping from 1 to 20 year over year.
Market impact
The conversion flow is arriving alongside fresh capital demand. Farside data show US spot Bitcoin ETFs absorbed $2.57 billion across seven positive sessions from August 17 through August 25, with IBIT taking $1.82 billion, or 71% of the total. IBIT held 765,389.9 BTC as of August 25, equal to 3.645% of Bitcoin's 21 million supply, with BlackRock listing net assets at $60.65 billion on the same date, while Bitbo counts 1,246,336 BTC across 13 US spot funds, or 5.935% of supply. Grayscale completed 62% of its gross Bitcoin creations in kind in June, up from 28% in March, and 21Shares said its average completed transaction ran about $5 million over the three months through July.
Frequently asked questions
-
What did BlackRock change about IBIT?
BlackRock cut the minimum for converting privately held Bitcoin directly into IBIT shares from $25 million to $1 million, a 96% reduction that took effect in July. The in-kind program has already processed more than $5 billion in conversions.
-
How does an in-kind Bitcoin ETF conversion work?
A holder transfers Bitcoin to an authorized participant, who deposits it with the trust in exchange for newly issued ETF shares credited to the holder's account. The route sidesteps the sale, wire, and repurchase sequence and may defer a taxable gain for some holders.
-
Why are wealthy Bitcoin holders moving into ETFs?
BlackRock's Robbie Mitchnick told Bloomberg that kidnappings, ransom demands, and custody failures motivate some conversions. Chainalysis logged 46 violent crypto incidents through late June and CertiK counted 52 verified incidents in H1, with home invasions jumping from 1 to 20 year over year.
-
How much Bitcoin do US spot ETFs now hold?
Bitbo counted 1,246,336 BTC across 13 US spot funds on Aug 25, equal to 5.935% of the 21 million supply. IBIT alone held 765,389.9 BTC, or 3.645%, with BlackRock listing net assets at $60.65 billion on the same date.
-
Why does custody concentration matter?
CryptoSlate calculated that funds naming Coinbase as a custodian or primary custodian represent 84.1% of US Bitcoin ETF assets under a broad count, or about $74.06 billion on a stricter measure. Moving from thousands of self-custodied wallets into products whose operating dependencies converge in a handful of firms is…
Crypto News
CoinDesk
TheBlock
CoinTelegraph
Glassnode