ETF issuers are making it easier for large Bitcoin holders to shift their assets from personal custody into spot ETF shares.
BlackRock has reportedly lowered the minimum amount of Bitcoin required for investors to exchange BTC directly for shares of its Nasdaq-listed spot Bitcoin ETF, IBIT. Bloomberg reported that the move comes as security incidents across the crypto industry increase concerns about self-custody.
The minimum transaction size for Bitcoin used in an in-kind IBIT creation was reduced to $1 million in July, compared with the previous $25 million threshold. Bitwise has also reduced its minimum requirement, cutting it from $100 million to $3 million, according to the report.
Through an “in-kind creation,” investors transfer Bitcoin directly to an ETF and receive fund shares in return. This structure allows holders to avoid selling their BTC for cash before purchasing ETF shares, potentially preventing a taxable capital gain from the Bitcoin sale.
The strategy is already seeing substantial activity. IBIT has processed more than $5 billion in in-kind transactions, compared with about $3 billion in October, according to Robbie Mitchnick, BlackRock’s head of digital assets.
Growing concerns about crypto theft, hacks, kidnappings and custody failures appear to be contributing to the shift. Mitchnick told Bloomberg that security incidents can prompt Bitcoin holders to reconsider their custody arrangements and move some or all of their assets into ETFs.
The trend is expanding beyond Bitcoin as well. Issuers including Grayscale and VanEck now offer comparable in-kind mechanisms for ether ETFs.
Since launching in 2024, U.S. spot crypto ETFs have attracted billions of dollars in capital, giving investors another route to gain exposure to digital assets without directly holding the underlying tokens.
