BlackRock has cut the minimum threshold for in-kind conversions into its iShares Bitcoin Trust (IBIT) from $25 million down to $1 million, a 96% reduction that opens the door for a much wider range of institutional holders to swap actual bitcoin for ETF shares without triggering a taxable sale.
Robert Mitchnick, BlackRock's head of digital assets, disclosed the change in an interview with Bloomberg analysts Eric Balchunas and Isabelle Lee. Under the mechanism, bitcoin holders work with an authorized participant to deliver BTC directly to the trust in exchange for newly created IBIT shares, sidestepping the usual step of selling bitcoin for cash and buying the ETF on the open market.
Why the Threshold Mattered
At $25 million, in-kind conversion was realistically available only to whales, large funds, and corporate treasuries. Dropping the bar to $1 million brings in family offices, smaller hedge funds, and high-net-worth individual holders who have accumulated bitcoin directly but want the custody, liquidity, and reporting simplicity of holding it through a regulated ETF wrapper instead. Because an in-kind conversion doesn't require selling the underlying bitcoin, it can also avoid realizing a taxable capital gain, a meaningful advantage for holders sitting on large unrealized profits.
Related: Bitcoin, Ethereum ETFs Post Best Combined Inflow Week Since April
Part of a Broader Push for Flow
The move comes as spot bitcoin ETFs have shown a mixed flow picture this month, with strong multi-day inflow streaks occasionally interrupted by single-day outflows tied to broader market volatility. Lowering the conversion bar gives BlackRock a direct lever to pull more bitcoin out of self-custody and cold storage and into IBIT's reported holdings, growing the fund's asset base through conversions rather than relying solely on new cash inflows. It also reinforces IBIT's position as the default institutional entry point for bitcoin exposure at a moment when competing issuers are still working to differentiate their own products on fees and mechanics rather than distribution reach.
