BlackRock Lowered Threshold for Swapping Bitcoin into Its ETF by 25 Times

Published: August 26, 2026 – 11:18 UTC

BlackRock lowered the minimum bitcoin transfer amount into its ETF from $25 million to $1 million.
More than $5 billion in crypto has already been converted via the bitcoin-based IBIT fund.
The in-kind mechanism is increasingly expanding to Ethereum and Solana, making it easier for large investors to move into traditional financial products.

Wall Street is making it easier for large bitcoin holders to move from self-custody to exchange-traded funds: investors can swap the first cryptocurrency directly for ETF shares without selling it for cash, Bloomberg reports. The in-kind creation mechanism is becoming more accessible and standardized, and BlackRock has already processed more than $5 billion of such conversions through its bitcoin ETF, IBIT.

BlackRock Lowered the Minimum Transaction Amount

Until recently, deals like these were mostly bespoke arrangements for the largest investors. However, after US regulators allowed ETF creation via the in-kind mechanism, the practice began to spread across the market.

In July, BlackRock lowered the minimum size of such a transaction from $25 million to $1 million. An investor transfers bitcoin to the fund and receives its shares in return. The transaction is executed by an authorized participant or a market maker.

This gives large crypto holders several advantages:

No need to self-custody private keys and crypto wallets
The asset moves into the structure of a traditional financial product
The investor continues to gain exposure to bitcoin
Swapping crypto for an ETF can potentially avoid an immediate taxable event that could arise from selling bitcoin for cash, depending on the investor’s circumstances

Demand for this service is also supported by the risks associated with holding large crypto fortunes, including theft, hacks, and issues with custodial services.

“It’s going to keep growing because we keep expanding the access. People see things happen in the outside world — whether it’s kidnappings, ransom, custody failures — that motivate them to make this switch for all or some of their holdings,” said Robbie Mitchnick, BlackRock’s head of digital assets.

More Than $5 Billion Converted Into ETF Shares via IBIT

Amid returning demand in the crypto market, interest in this mechanism is growing. Over the past week, Bitcoin rose above $79,000, while U.S. spot ETFs recorded the largest weekly capital inflow in 2026 — $1.92 billion. In total, Bitcoin and Ethereum ETFs attracted $2.62 billion.

According to Mitchnick, more than $5 billion worth of conversions of the first cryptocurrency into fund shares has already gone through IBIT — the largest U.S. spot bitcoin ETF. For comparison, in October last year, this figure was over $3 billion.

However, the process is not yet fully automated. It can take more than a week and requires the involvement of market makers and authorized participants.

At Bitwise, the minimum size for the first transaction was $100 million. It was later lowered to $50 million, and now it is about $3 million.

“The whole process is still bespoke, from introducing a client to a market maker to working with the adviser, but it’s becoming more standardized,” said Matt Hougan, Bitwise CIO.

He said that transactions used to move slowly, whereas now they resemble an “assembly line,” and in the future they could effectively become a one-click operation.

The Mechanism Expands to Ethereum and Solana

Gradually, in-kind creations are moving beyond bitcoin. Grayscale and VanEck use them for Ethereum-based products, and Bitwise carries out such transactions in both Ethereum and Solana as well.

At Grayscale, the share of gross ETF creations executed via this mechanism increased significantly over several months. In March, it was 28% for Bitcoin products and 57% for Ethereum, and in June — already 62% and 63%, respectively.

At Morgan Stanley, in-kind conversions account for about 5-7% of the assets of the MSBT spot bitcoin ETF, which totals about $560 million. Meanwhile, at 21Shares, the average size of completed transactions over the past three months was about $5 million.

The main constraint remains infrastructure: transactions require intermediaries willing to work directly with cryptocurrency. However, as the number of such participants grows, minimum amounts may continue to decline, opening the mechanism to an ever-wider range of large investors.

“Today, this crypto-native use case is in full effect. We also increasingly see ETF market makers embracing the in-kind feature as they gravitate back to the original, and often more efficient, way in which ETPs are classically operated,” said Krista Lynch, Grayscale’s head of trading and capital markets.

Recall that Wintermute assessed the prospects for bitcoin’s further growth.

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Source: Incrypted