BlackRock and Bitwise have significantly lowered the barriers for converting privately held Bitcoin into ETF shares, expanding access beyond ultra-wealthy clients to a broader class of institutional investors and family offices.
BlackRock reduced its minimum transaction size for converting Bitcoin directly into iShares Bitcoin Trust (IBIT) shares from $25 million to $1 million in July, according to the company. The reduction represents a 96% decrease in the entry threshold. Bitwise made an even steeper cut, lowering its minimum from $100 million to $3 million—a 97% reduction from its original floor.
The program has processed more than $5 billion to date through BlackRock's IBIT, the company confirmed.
How In-Kind Conversions Work
In-kind conversions allow holders to transfer Bitcoin directly into an ETF trust in exchange for shares, avoiding the execution costs and potential tax consequences of selling Bitcoin, wiring dollars, and repurchasing ETF exposure. The SEC approved in-kind creations and redemptions for crypto exchange-traded products in July 2025.
Other providers have made similar moves. Morgan Stanley and Galaxy cut their lending minimum from $25 million to $5 million for referred clients and shortened onboarding timelines by as much as 75%. ARK 21Shares' ARKB completed transactions averaging about $5 million over three months, while Grayscale reported that in-kind creations represented 62% of its gross Bitcoin creations in June, up from 28% in March.
Custody and Security Considerations
BlackRock's head of digital assets noted that security concerns, including kidnappings and ransom demands, can motivate holders to move coins into ETF custody. Chainalysis documented 46 violent crypto incidents through late June 2026, with attackers stealing more than $30 million during the first half of the year. CertiK counted 52 verified incidents during the same period, up 33.3% from the prior year.
Moving coins into an ETF reduces individual exposure to key loss and physical coercion but concentrates Bitcoin holdings within a smaller set of institutional custodians. The majority of US Bitcoin ETF assets maintain custody connections to Coinbase, though other custodians including Anchorage, BitGo, and Gemini operate across various funds.
Market Activity and Institutional Adoption
US spot Bitcoin ETFs held approximately 1.25 million BTC across 13 funds as of late August, representing 5.935% of the 21 million total supply. IBIT alone held 765,389.9 BTC, or 3.645% of the supply, with net assets of $60.65 billion.
The conversion program expansion coincides with sustained ETF demand. US spot Bitcoin ETFs absorbed $2.57 billion across seven positive trading sessions from mid-August through late August, with IBIT capturing $1.82 billion of that total.
