Key Takeaways
- Blackrock cut IBIT’s in-kind minimum from $25M to $1M, as direct BTC-to-ETF swaps expand.
- Grayscale’s in-kind BTC creations rose from 28% in March to 62% in June, signaling wider adoption.
- Bitwise supports BTC, ETH, and SOL swaps from $3M, pushing ETF conversions toward standardization.
Blackrock Expands In-Kind Bitcoin Swaps as ETF Access Widens
Wall Street is making it easier for crypto investors to move from self-custody into exchange-traded funds without first selling their digital assets.
According to Bloomberg, in-kind creations are becoming more common across major issuers, allowing investors to contribute bitcoin directly to a spot ETF and receive shares in return. The mechanism preserves market exposure while moving custody into the conventional financial system.
The biggest change is access. Blackrock cut the minimum size for bitcoin-to-ETF conversions in July from $25 million to $1 million when the service first became available. Its iShares Bitcoin Trust (IBIT) has already processed more than $5 billion of such conversions, according to Robbie Mitchnick, Blackrock’s head of digital assets.
“It’s going to keep growing because we keep expanding the access,” Mitchnick told Bloomberg.
Minimums Fall as the Process Becomes More Routine
Bitwise has followed a similar path.
Its first in-kind bitcoin conversion required a transaction of at least $100 million to secure support from authorized participants. That threshold later dropped to $50 million and now stands at $3 million.
Bitwise Chief Investment Officer Matt Hougan remarked that while the whole process is still bespoke, it is becoming increasingly standardized.
Other issuers are seeing steady uptake. At 21Shares, completed in-kind transactions over the past three months have averaged about $5 million. Morgan Stanley said such conversions account for roughly 5% to 7% of holdings in its approximately $560 million spot bitcoin ETF.
The attraction goes beyond convenience. Investors can reduce reliance on private keys and wallets, and depending on individual tax circumstances, exchanging bitcoin rather than selling it for cash may avoid an immediate taxable event.
Ether and Solana Join the In-Kind Shift
The model is also expanding beyond bitcoin. Grayscale uses in-kind transactions for ether products, while Bitwise supports conversions for both ether and solana.
At Grayscale, the shift has accelerated sharply. In March, 28% of gross bitcoin creations and 57% of gross ether creations were in-kind. By June, those figures had risen to 62% and 63%, respectively.
The remaining obstacle is infrastructure. Transactions still require authorized participants or market makers willing to handle crypto, which adds cost and complexity.
Still, the direction is clear. As minimums fall and more intermediaries enter the market, direct swaps from bitcoin, ether, and solana into ETF shares are moving from a private-bank-style service for whales toward a more standardized part of institutional crypto investing.
