Key Takeaways
- • BlackRock has processed roughly $3.6 billion in in-kind conversions of directly held Bitcoin into shares of its iShares Bitcoin Trust ETF (IBIT) since regulators approved the mechanism last year, according to Barron's, though the true figure may be higher because BlackRock does not see every conversion.
- • BlackRock head of digital assets Robbie Mitchnick says demand has only moved up and that the current moment is the highest the firm has seen, with security and custody concerns cited as the primary driver.
- • Minimum in-kind transaction sizes have fallen from around $30 million at launch to roughly $1-2 million, widening access beyond institutional and ultra-high-net-worth investors.
- • Competitors are following: Fidelity offers in-kind conversions for Bitcoin, Ethereum and Solana funds with a $1 million minimum, and Grayscale accepts in-kind contributions through 10 ETFs with lower minimums.
- • Mitchnick describes the recent Binance hack as a reminder of exchange risk that large holders already understood, positioning ETF custody as an institutional-grade cold-storage alternative to exchanges and hot wallets.
Summary
BlackRock, manager of the largest Bitcoin exchange-traded fund, is seeing rapid growth in in-kind crypto conversions, in which large Bitcoin holders exchange directly held digital assets for ETF shares. According to Barron's, BlackRock has recorded $3.6 billion of in-kind conversions into IBIT shares since regulators approved the transactions last year. The firm does not process these transactions itself and does not necessarily see every conversion, so the actual total could be considerably larger. BlackRock also offers in-kind conversions for two Ethereum products, the iShares Ethereum Trust ETF and the iShares Staked Ethereum Trust ETF, but volumes there are far smaller.
BlackRock's head of digital assets, Robbie Mitchnick, said demand has risen steadily and that the current period represents the highest interest the firm has seen. He attributed much of the appeal to security. Holding ETF shares managed by a large fund company is generally viewed as less risky than using a crypto exchange or a hot wallet, which is always online. "Outsourcing the custody to an institutional-grade cold-storage model that the holder doesn't have to worry about is proving to be really reassuring and attractive to these holders," Mitchnick said. He noted that the recent hack of Binance underscored exchange risks, though he said large Bitcoin holders had long understood those risks.
A major factor in growing interest has been the decline in minimum transaction sizes. When BlackRock began offering in-kind transactions, the minimum was about $30 million; it now ranges from roughly $1 million to $2 million. The minimums are set by intermediaries that facilitate the exchanges, including Galaxy Digital, Talos and Virtu, whose costs have declined. Mitchnick said he would like minimums to fall to a single ETF share but acknowledged cost structures will prevent them from reaching zero soon.
Competitors are also offering in-kind conversions. Fidelity Investments, which manages the second-largest Bitcoin fund, the Fidelity Wise Origin Bitcoin Fund, accepts in-kind conversions across Bitcoin, Ethereum and Solana funds with a $1 million minimum; Fidelity declined to disclose volumes. Grayscale announced in October that it accepts in-kind contributions through 10 of its ETFs with minimums that fluctuate but are well below those at BlackRock and Fidelity; it also declined to comment on volumes.
Beyond security, Mitchnick said in-kind exchanges can move Bitcoin holdings into managed brokerage accounts alongside investors' other assets, simplifying tax and estate planning. Some investors use the approach for diversification or to pair IBIT shares with options strategies that hedge downside price risk. Asked about the main motivation, Mitchnick said, "The single largest one is security and peace of mind."
BlackRock's head of digital assets, Robbie Mitchnick, said demand has risen steadily and that the current period represents the highest interest the firm has seen. He attributed much of the appeal to security. Holding ETF shares managed by a large fund company is generally viewed as less risky than using a crypto exchange or a hot wallet, which is always online. "Outsourcing the custody to an institutional-grade cold-storage model that the holder doesn't have to worry about is proving to be really reassuring and attractive to these holders," Mitchnick said. He noted that the recent hack of Binance underscored exchange risks, though he said large Bitcoin holders had long understood those risks.
A major factor in growing interest has been the decline in minimum transaction sizes. When BlackRock began offering in-kind transactions, the minimum was about $30 million; it now ranges from roughly $1 million to $2 million. The minimums are set by intermediaries that facilitate the exchanges, including Galaxy Digital, Talos and Virtu, whose costs have declined. Mitchnick said he would like minimums to fall to a single ETF share but acknowledged cost structures will prevent them from reaching zero soon.
Competitors are also offering in-kind conversions. Fidelity Investments, which manages the second-largest Bitcoin fund, the Fidelity Wise Origin Bitcoin Fund, accepts in-kind conversions across Bitcoin, Ethereum and Solana funds with a $1 million minimum; Fidelity declined to disclose volumes. Grayscale announced in October that it accepts in-kind contributions through 10 of its ETFs with minimums that fluctuate but are well below those at BlackRock and Fidelity; it also declined to comment on volumes.
Beyond security, Mitchnick said in-kind exchanges can move Bitcoin holdings into managed brokerage accounts alongside investors' other assets, simplifying tax and estate planning. Some investors use the approach for diversification or to pair IBIT shares with options strategies that hedge downside price risk. Asked about the main motivation, Mitchnick said, "The single largest one is security and peace of mind."
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.