BlackRock Lowers Bitcoin ETF In-Kind Transaction Floor to $1M, Report Says

ETF issuers are lowering the minimum requirements for large Bitcoin holders seeking to move their BTC from self-custody into spot ETF products.

BlackRock has reportedly cut the minimum Bitcoin amount needed for an in-kind exchange involving its Nasdaq-listed spot Bitcoin ETF, IBIT. Bloomberg reported that the move comes as a series of crypto hacks, thefts and custody incidents prompt investors to reassess the risks of holding Bitcoin themselves.

The minimum value required for an IBIT in-kind transaction was reduced to $1 million in July from $25 million previously. Bitwise has also lowered its threshold, dropping it from $100 million to $3 million, according to the report.

Under the in-kind creation process, investors transfer Bitcoin directly to the fund and receive ETF shares in return. This allows them to bypass the step of selling BTC for cash and subsequently purchasing ETF shares, potentially avoiding a capital gains tax event.

The use of these transactions has increased substantially. IBIT has processed more than $5 billion through in-kind swaps, compared with about $3 billion in October, according to Robbie Mitchnick, BlackRock’s head of digital assets.

Security risks across the crypto industry are helping drive demand for the arrangement. Incidents involving kidnappings, hacks and custody failures have encouraged some holders to reconsider self-custody. Mitchnick told Bloomberg that such events can persuade investors to transfer some or all of their Bitcoin holdings into ETFs.

The same approach is gaining traction with other cryptocurrencies. Grayscale and VanEck have introduced in-kind mechanisms for ether ETFs as well.

Since U.S. spot crypto ETFs began trading in 2024, the products have attracted billions of dollars in capital, giving investors a regulated alternative to directly holding digital assets.