BlackRock has slashed the minimum bitcoin value required for a direct in-kind swap into its spot ETF IBIT to $1 million, down from $25 million, according to a Bloomberg report published Tuesday. Rival issuer Bitwise made a comparable move, cutting its own threshold to $3 million from $100 million.
The mechanism, known as in-kind creation, lets investors hand bitcoin directly to the fund in exchange for ETF shares, sidestepping a taxable sale-and-repurchase that would otherwise trigger capital gains. It gives large holders a way to exit self-custody without first converting to cash.
Volume through the process is already substantial. IBIT alone has processed more than $5 billion in these swaps, up from $3 billion in October, according to Robbie Mitchnick, BlackRock’s head of digital assets. He told Bloomberg that rising incidents of crypto-related kidnappings, exchange hacks and custody failures are pushing holders to move some or all of their bitcoin into regulated fund structures rather than manage private keys themselves.
The trend extends beyond bitcoin. Issuers including Grayscale and VanEck now offer comparable in-kind swap mechanisms for ether ETFs, giving institutional holders a similar tax-efficient exit from direct custody.
The lower thresholds land as bitcoin trades near $78,500, still up roughly 23% over the past seven days despite pulling back from a three-month high above $81,000 earlier this week. Spot bitcoin ETFs have absorbed billions in inflows since launching in January 2024, and the cheaper swap terms mark a further step in institutionalizing bitcoin ownership. As custody risk becomes a bigger factor in investor decisions, issuers competing for whale-sized allocations appear increasingly willing to lower the barriers that once kept the largest holders on the sidelines.
