BlackRock has now processed more than $5 billion in Bitcoin-for-ETF share swaps into its IBIT fund, up from over $3 billion in October. The in-kind mechanism, which lets investors move crypto into a regulated ETF without selling, is picking up speed as issuers slash minimums and security worries push holders toward custody.
Why the numbers are climbing
BlackRock cut its minimum for in-kind swaps to $1 million in July, down from $25 million at launch. Bitwise has gone from $100 million to $3 million. That's opened the door to smaller holders. Robbie Mitchnick, BlackRock's head of digital assets, said security concerns like kidnappings and custody failures are motivating the switch. The process can take more than a week, and inquiries come from both US and international clients.
The mechanics and the cost
Every trade has to pass through an authorized participant or market maker willing to take custody of the crypto. That adds cost and initially limited the service to the largest holders. But issuers expect minimums to keep falling as more intermediaries build capacity. At Morgan Stanley, in-kind conversions make up an estimated 5% to 7% of the roughly $560 million MSBT fund, though global ETF head Ally Wallace noted a lengthy education process. 21Shares has averaged around $5 million per in-kind transaction over the past three months, according to Alistair Perry. Bitwise's CIO Matt Hougan says the process now moves "more like a conveyor belt."
Beyond Bitcoin
The mechanism has expanded. Grayscale and VanEck now process in-kind trades for Ethereum, and Bitwise handles both Ethereum and Solana. At Grayscale, in-kind accounts for 62% of gross Bitcoin creations and 63% of Ethereum creations, up from 28% and 57% in March, according to Krista Lynch.
The market backdrop
Bitcoin climbed back above $81,000 for the first time since May, with spot ETFs pulling in more than $2.5 billion since August 17, bringing the month's total to just over $3 billion. That's the biggest monthly inflow since October 2025, with a few trading days still to go.
Issuers expect minimums to keep falling as more intermediaries build capacity. That could bring in-kind swaps to a wider pool of investors, but the education curve remains steep.
