ETF providers are lowering the entry threshold for major Bitcoin holders who want to move BTC from self-custody into spot ETF shares.
BlackRock has reportedly reduced the minimum Bitcoin amount needed to exchange BTC directly for shares of its Nasdaq-listed spot Bitcoin ETF, IBIT. Bloomberg reported that the change comes as a rise in crypto-related theft and custody incidents encourages investors to reconsider how they store their assets.
The minimum Bitcoin value required for an in-kind IBIT transaction dropped to $1 million in July from $25 million previously. Bitwise has made an even larger adjustment, reducing its threshold from $100 million to $3 million, according to the report.
The transactions use an “in-kind creation” mechanism. Investors transfer Bitcoin directly to the ETF issuer and receive ETF shares in exchange, eliminating the need to sell BTC for cash and then purchase shares. This can help investors avoid realizing a capital gain from a Bitcoin sale.
Interest in the mechanism has grown considerably. BlackRock’s IBIT has handled more than $5 billion in in-kind swaps, compared with around $3 billion in October, according to Robbie Mitchnick, the company’s head of digital assets.
The shift is being supported by growing concerns over crypto hacks, kidnappings and problems involving digital-asset custody. Mitchnick told Bloomberg that incidents affecting other holders can motivate investors to move some or all of their Bitcoin away from self-custody.
The approach is not exclusive to Bitcoin. Grayscale and VanEck have also introduced in-kind transaction options for their ether ETFs.
U.S. spot crypto ETFs have attracted billions of dollars since their introduction in 2024, increasing the appeal of regulated exchange-traded products as an alternative to directly holding cryptocurrencies.
