Blackrock Hits $5B in Direct Bitcoin-to-ETF Conversions

August 26, 2026 — Blackrock has processed over $5 billion in direct bitcoin-to-ETF conversions as institutional investors increasingly swap crypto assets for exchange-traded fund shares instead of selling for cash first. The iShares Bitcoin Trust (IBIT) milestone comes as minimum thresholds for in-kind transactions have dropped significantly, expanding access beyond the largest holders.

Immediate Details & Direct Quotes

Blackrock cut the minimum size for bitcoin-to-ETF conversions in July from $25 million to $1 million, according to a Bloomberg report. Robbie Mitchnick, Blackrock’s head of digital assets, confirmed the $5 billion milestone and indicated the trend will continue.

“It’s going to keep growing because we keep expanding the access,” Mitchnick told Bloomberg.

Bitwise has followed a similar trajectory. Its first in-kind bitcoin conversion required a minimum transaction of $100 million to secure authorized participant support. That threshold later dropped to $50 million and now stands at $3 million.

Matt Hougan, Bitwise chief investment officer, noted that while the process remains bespoke, it is becoming increasingly standardized across the industry.

At 21Shares, completed in-kind transactions over the past three months have averaged approximately $5 million. Morgan Stanley reported that such conversions account for roughly 5% to 7% of holdings in its approximately $560 million spot bitcoin ETF.

Market Context & Reaction

The shift toward in-kind creations represents a growing preference among large crypto holders to maintain market exposure while moving custody into traditional finance. Investors can reduce reliance on private keys and wallets through the conversion process.

Depending on individual tax circumstances, exchanging bitcoin directly for ETF shares rather than selling into cash may avoid an immediate taxable event, according to the Bloomberg report.

The mechanism is expanding beyond bitcoin. Grayscale now uses in-kind transactions for ether products, while Bitwise supports conversions for both ether and solana.

As of the latest data, infrastructure remains the primary obstacle. Transactions still require authorized participants or market makers willing to handle crypto, which adds cost and complexity to the process.

Background & Historical Context

The move toward in-kind conversions reflects a broader trend of institutional adoption in the crypto market. Blackrock launched IBIT as part of the spot bitcoin ETF wave, and the fund has since become one of the largest vehicles for institutional bitcoin exposure.

Grayscale’s adoption of in-kind transactions has accelerated sharply this year. In March, 28% of gross bitcoin creations and 57% of gross ether creations were in-kind. By June, those figures had risen to 62% and 63%, respectively.

The expansion to ether and solana suggests the model is gaining traction across multiple digital assets, not just bitcoin. Bitwise now supports conversions for all three cryptocurrencies starting at $3 million minimums.

What This Means

The falling minimums signal a democratization of institutional crypto investment tools. What began as a private-bank-style service for whale investors is becoming a more standardized part of institutional crypto investing.

In the near term, expect continued growth in in-kind conversions as more intermediaries enter the market and infrastructure improves. The process may soon become a standard option for ETF investors.

For large holders, direct conversions offer a practical path from self-custody into regulated financial products. For issuers, the model expands their addressable market beyond cash-based investors.

The trend toward standardization across bitcoin, ether, and solana suggests in-kind conversions could become a default mechanism for institutional crypto exposure in the coming months.

This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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