Large cryptocurrency holders are increasingly exchanging bitcoin directly for exchange-traded fund shares instead of selling into cash first. According to reports from Bloomberg, falling investment minimums at major financial institutions are making the process more accessible and expanding the model to include ether and solana.
Blackrock and Bitwise Lower Entry Barriers
The primary driver behind the shift is improved access. Blackrock reduced the minimum size for bitcoin-to-ETF conversions from $25 million to $1 million. Robbie Mitchnick, Blackrock's head of digital assets, stated that its iShares Bitcoin Trust (IBIT) has processed more than $5 billion in such conversions. Bitwise has also significantly lowered its transaction thresholds, moving from an initial requirement of $100 million down to $3 million for bitcoin, ether, and solana swaps.
Other issuers report steady participation. At 21Shares, completed in-kind transactions over a recent three-month period averaged about $5 million. Morgan Stanley noted that these conversions account for roughly 5% to 7% of holdings within its approximately $560 million spot bitcoin ETF.
Expansion to Ether and Solana
The in-kind creation model is also growing beyond bitcoin. Grayscale utilizes in-kind transactions for ether products, while Bitwise supports conversions for both ether and solana. Adoption metrics have climbed notably; at Grayscale, in-kind gross bitcoin creations rose from 28% in March to 62% in June, while ether creations grew from 57% to 63% over the same timeframe.
While infrastructure hurdles remain—such as the requirement for authorized participants or market makers to handle crypto assets, adding cost and complexity—falling minimums and increasing intermediary participation are helping standardize direct crypto-to-ETF conversions for institutional investors.
