BlackRock has reduced the minimum size for in-kind exchanges of Bitcoin into its iShares Bitcoin Trust ETF, IBIT, from $25 million to $1 million. The change broadens access to a process that lets holders move Bitcoin into the fund without first selling the asset for cash.
Robbie Mitchnick, BlackRock’s head of digital assets, disclosed the new threshold on Bloomberg’s ETF IQ on Aug. 10 and said it could be lowered further over time. The same mechanism can also work in reverse, with exchanges handled through authorized participants.
A lower bar for ETF conversion
Under the in-kind process, a Bitcoin holder delivers coins through an authorized participant and receives IBIT shares in return. Previously, the $25 million minimum meant the route was largely limited to very large holders. At $1 million, the threshold is 96% lower and opens the option to a broader segment of the market.
The adjustment does not require the investor to sell Bitcoin before entering the ETF. That distinction matters for holders who want exposure through the fund structure rather than a direct spot position, while avoiding a standard sale-and-repurchase sequence.
How the structure works
Mitchnick said the exchange is available through authorized participants, the firms that handle creation and redemption activity for ETFs. In practical terms, the holder transfers Bitcoin and receives shares of IBIT, BlackRock’s spot Bitcoin ETF.
He also said the process works both ways. That means the same in-kind framework can be used not only to move Bitcoin into the ETF, but also to exchange IBIT shares back through the authorized-participant channel.
Policy backdrop since 2025
This type of in-kind swap became possible for crypto ETFs after the U.S. Securities and Exchange Commission allowed the model in July 2025. BlackRock’s lower minimum shows the mechanism moving down-market after first being available only at a much higher size.
The change expands practical access to a feature that had existed in principle but remained out of reach for many holders because of the earlier cutoff. Mitchnick indicated the minimum may fall further in time, although no additional threshold was announced.
Tax treatment remains a point of uncertainty
The article notes that, under IBIT’s grantor trust structure, an in-kind contribution may be treated as non-taxable for U.S. tax purposes, with the investor’s cost basis and holding period carrying over to the ETF shares. That could make the conversion a deferral event rather than an immediate taxable sale.
However, that outcome depends on IBIT continuing to be treated as a grantor trust and has not been formally ruled on by the Internal Revenue Service. Any tax benefit described is therefore potential rather than confirmed, and the underlying gain would be deferred, not erased.
Current market context
At the time of the report, Bitcoin was trading at about $63,600. The next confirmed development is the lower $1 million minimum itself, now in place for in-kind Bitcoin-to-IBIT exchanges through authorized participants, with BlackRock signaling that the bar could be reduced again later.
Source: beincrypto.com