BlackRock Reportedly Lowers Bitcoin ETF In-Kind Minimum to $1M

ETF providers are lowering the minimum requirements for large Bitcoin holders looking to move from self-custody into spot ETF shares.

BlackRock has reportedly reduced the amount of Bitcoin required for large holders to exchange their BTC directly for shares of its Nasdaq-listed spot Bitcoin ETF, IBIT. Bloomberg reported that the change comes as concerns over crypto theft and custody risks continue to grow.

The minimum Bitcoin value needed for an in-kind transaction with IBIT fell to $1 million in July, down sharply from the previous $25 million threshold. Bitwise has also lowered its minimum, reducing the requirement from $100 million to $3 million, according to the report.

The process, known as an “in-kind creation,” allows investors to transfer Bitcoin directly to the fund in exchange for ETF shares. Because investors do not first have to sell their BTC for cash and then purchase ETF shares, the structure can potentially avoid triggering capital gains taxes on the underlying Bitcoin sale.

Demand for these transactions has already increased significantly. BlackRock’s IBIT has processed more than $5 billion through in-kind swaps, up from approximately $3 billion in October, according to Robbie Mitchnick, BlackRock’s head of digital assets.

The growing interest is partly linked to concerns over crypto-related kidnappings, hacks and failures involving custody services. Mitchnick told Bloomberg that incidents occurring across the crypto industry are encouraging some investors to reconsider how they hold their Bitcoin and move some or all of their holdings into ETFs.

The trend is also spreading beyond Bitcoin. ETF issuers including Grayscale and VanEck have introduced similar in-kind mechanisms for ether products.

Since spot crypto ETFs launched in the U.S. in 2024, the products have attracted billions of dollars from investors, further strengthening their role as an alternative way to gain exposure to digital assets.