BlackRock’s iShares Bitcoin Trust (IBIT) has processed more than $5 billion in Bitcoin-to-ETF share swaps since reducing its minimum in-kind transaction size to $1 million in July, Bloomberg reports. The shift, driven by security and tax considerations, has spurred increased activity, with firms such as Bitwise, Grayscale, and VanEck also handling similar conversions for Bitcoin and other cryptocurrencies.
The move follows a significant drop in the threshold for in-kind transactions, which BlackRock lowered from $25 million to $1 million, broadening access for institutional investors. Bitwise has mirrored this trend by reducing its own minimum from $100 million to $3 million, while Grayscale’s in-kind conversions now account for 62% of Bitcoin creations and 63% of Ethereum creations, up from 28% and 57% in March.
Robbie Mitchnick, head of digital assets at BlackRock, said the change aims to encourage clients to “make this switch for all or some of their holdings,” citing security concerns and tax efficiency as key motivators. Matt Hougan of Bitwise described the process as “more like a conveyor belt,” reflecting improved efficiency in handling conversions.
Morgan Stanley’s MSBT fund, which manages $560 million in assets, reports that in-kind conversions make up 5–7% of its portfolio. Ally Wallace, the firm’s global ETF head, acknowledged challenges in educating clients about the mechanics of in-kind swaps, which can take over a week to complete.
Alistair Perry of 21Shares noted that average in-kind transactions processed by the firm amount to $5 million per trade, highlighting the scale of activity. Meanwhile, Grayscale’s Krista Lynch confirmed the firm’s significant role in Bitcoin and Ethereum conversions, though backend bottlenecks persist due to reliance on authorized participants for custody.
Uncertainties remain regarding future reductions in minimum thresholds, as intermediaries expand capacity. Industry participants suggest that while the process is gaining traction, hurdles such as client education and operational bottlenecks must still be addressed.
Written by Oliver Grant
Markets Desk
