BlackRock Cuts Bitcoin ETF Conversion Minimum to $1M

BlackRock reduced the minimum for converting privately held Bitcoin into shares of its iShares Bitcoin Trust from $25 million to $1 million. Bitwise lowered its conversion minimum to $3 million from a prior threshold. BlackRock reported its program has processed more than $5 billion in conversions.

The changes make in-kind ETF conversions available to a wider set of wealthy clients and family offices. BlackRock’s reduction is a 96% cut in the qualifying minimum; Bitwise’s change is about a 97% drop from its original threshold. Each in-kind conversion moves Bitcoin into a fund’s custody and issues ETF shares in exchange, preserving exposure to Bitcoin’s price without a separate sale and repurchase.

Authorized participants and intermediaries manage the technical steps. A holder transfers Bitcoin to an authorized participant, the trust issues ETF shares at settlement, and the authorized participant delivers shares to the holder’s brokerage account. The direct coin-for-shares route eliminates steps that can add execution costs and, for some structures, can change tax timing. Tax outcomes vary with a holder’s legal structure and require individual advice.

Several firms have programs to ease the process. Morgan Stanley and Galaxy offer a referral arrangement that lets eligible clients lend crypto to Galaxy for coordination of in-kind creations. Under that program, Galaxy reduced its minimum for referred clients from $25 million to $5 million and estimates onboarding times can be shortened by up to 75%.

Fee differences apply across funds. IBIT charges a 0.25% annual sponsor fee and Bitwise’s comparable fund charges 0.20%. At the new floors, annual sponsor fees equal roughly $2,500 on a $1 million IBIT position and about $6,000 on a $3 million Bitwise position. One-time conversion charges to end clients have not been disclosed by providers.

Market activity shows a shift in how ETFs are supplied. In-kind transactions made up about 62% of gross Bitcoin creations in June, up from about 28% in March. Across 13 U.S. spot Bitcoin ETFs, funds held roughly 1,246,336 BTC, equal to about 5.9% of the 21 million supply. IBIT’s holdings were about 765,390 BTC, or roughly 3.6% of the total.

Custody of those coins is concentrated among a small set of institutional providers. Funds list multiple custodians, including Anchorage, BitGo, Coinbase, in-house digital units and Gemini, and funds connected to a major exchange in custody arrangements represented roughly 80–84% of U.S. ETF assets under different counting methods.

Security and physical-risk concerns are among the reasons some holders move coins into funds. BlackRock’s head of digital assets, Robbie Mitchnick, pointed to kidnappings, ransom demands and custody failures as factors that can prompt transfers. One data firm counted 46 violent crypto incidents through late June and estimated attackers stole more than $30 million in the first half of 2026; another tracker recorded 52 verified incidents with about $124.1 million in recorded exposure for the same period.

Flows into ETFs now come from two sources: fresh capital buying ETF shares for cash and existing Bitcoin holders using in-kind conversions to place coins into funds. BlackRock reported more than $5 billion has passed through its program, while recent daily ETF net inflows have concentrated substantial demand into a small number of products.