BlackRock's IBIT has attracted $5B in Bitcoin whale deposits through reduced minimum swap thresholds, signaling institutional adoption of regulated ETF custody over self-custody.
Macro & Markets ·
BlackRock's iShares Bitcoin Trust has processed more than $5 billion in Bitcoin-to-ETF conversions through its in-kind swap mechanism, facilitated by a reduction in minimum transaction size to $1 million as of July. The structure enables large holders to exchange cryptocurrency for fund shares while maintaining Bitcoin exposure under regulated custody, a shift that addresses concerns about self-custody risks including security breaches and theft. The process typically requires over a week to complete and now draws inquiries from domestic and international clients.
The reduction from an initial $25 million threshold has accelerated adoption across the sector. Bitwise and Grayscale have implemented similar mechanisms, with Grayscale reporting that in-kind transactions now comprise 62 percent of its Bitcoin creations and 63 percent of its Ethereum creations, up substantially from earlier in the year. Other providers including 21Shares and VanEck have also launched in-kind services, with the latter extending the offering to Ethereum and Bitwise to Solana.
One constraint persists: each swap must route through an authorized participant or market maker holding custody of the underlying asset, creating operational costs that explain why larger minimums existed initially. Industry participants anticipate further reductions as more intermediaries develop the necessary infrastructure to handle these transfers.