BlackRock has reduced the minimum amount of bitcoin needed for a direct in-kind swap into shares of its spot Bitcoin exchange-traded fund, IBIT. The threshold fell to $1 million in July from $25 million previously, according to the report.
The change affects investors using in-kind creation, a process that allows bitcoin holders to exchange BTC directly for ETF shares rather than selling first. That structure can help avoid a taxable sale event, and it lowers the cost of moving from self-custody into a regulated fund vehicle.
Lower entry point for direct swaps
The lower minimum makes the process more accessible to large bitcoin holders that want to convert existing BTC positions into shares of BlackRock’s Nasdaq-listed IBIT. Under the earlier threshold, investors needed $25 million worth of bitcoin to use the direct swap route; now the bar is set at $1 million.
Bitwise has also moved in the same direction. Its minimum for comparable swaps was cut to $3 million from $100 million, indicating that issuers are reducing operational barriers as interest in this type of transaction grows.
How the structure works
In-kind creation lets an investor deliver bitcoin and receive ETF shares in return. Because the holder is not required to sell the bitcoin first, the transaction can avoid triggering capital gains taxes that might arise from an outright sale.
That feature is particularly relevant for long-term holders sitting on appreciated positions. For them, a direct exchange into ETF shares can offer a way to change custody and investment format without first converting the asset into cash.
Demand tied to custody concerns
The report says the trend is accelerating as crypto crime and custody concerns push some investors away from self-custody. For large holders, ETF shares can represent a simpler way to maintain bitcoin exposure while handing storage and operational responsibility to a fund structure.
IBIT has already processed more than $5 billion in these in-kind swaps, underscoring how quickly the mechanism has been adopted. The combination of lower minimums and ongoing security concerns appears to be supporting broader use of the option.
A wider ETF market shift
The use of in-kind swaps is not limited to bitcoin. The same report says the approach is spreading to ether, with issuers including Grayscale and VanEck offering similar options.
The development comes as spot crypto ETFs continue to pull in significant investor money following their 2024 debut. The next confirmed step is continued expansion of these creation and conversion pathways as issuers compete for institutional and high-net-worth flows.
Source: www.coindesk.com