BlackRock quietly lowered the bar for converting large Bitcoin holdings into shares of its exchange-traded fund, IBIT. According to an August 25 Bloomberg report, the minimum amount of Bitcoin needed to make that swap dropped to $1 million in July, down from $25 million. Bitwise made a similar cut, lowering its own threshold from $100 million to $3 million.

The change makes a once-exclusive option available to a much wider group of large Bitcoin holders, and it’s part of a broader shift of coins moving off personal wallets and into regulated funds.

The New $1 Million Threshold

Until this year, only the biggest institutional holders, those sitting on $25 million or more in Bitcoin, could swap their coins directly for IBIT shares. That threshold is now $1 million. For Bitwise’s fund, it dropped from $100 million to $3 million. 

Neither number has anything to do with what a regular investor needs to simply buy IBIT shares on Nasdaq. Anyone can still do that with any amount of money through a normal brokerage account. This change only affects people converting actual Bitcoin they already hold into ETF shares.

How the Swap Actually Works

The process is called in-kind creation. Here’s the plain-English version: instead of selling your Bitcoin for cash and then using that cash to buy ETF shares, which is a taxable event, you hand your Bitcoin directly to the fund and receive IBIT shares of comparable value in return. 

Because you never technically sold the Bitcoin, this can help holders sidestep triggering capital gains tax, though the tax outcome depends on the investor’s specific situation and the way the exchange is structured. 

This isn’t a do-it-yourself move. Only firms known as authorized participants can execute these swaps with BlackRock directly, so a holder needs a broker or trading desk to arrange it.

The SEC only approved this in-kind process for crypto ETFs in July 2025. Before that, funds were required to settle everything in cash.

Why Whales Are Making the Move Now

The transactions are already adding up. Robbie Mitchnick, BlackRock’s head of digital assets, told Bloomberg that IBIT alone has processed more than $5 billion in these swaps, up from roughly $3 billion in October. 

That’s not new money entering the market. It’s existing Bitcoin moving from personal custody into the ETF wrapper, so it shouldn’t be read as a fresh wave of buying pressure. 

As of August 25, IBIT’s fund page listed roughly $60.65 billion in net assets, a number these swaps add to without representing new cash entering the market. 

Mitchnick pointed to a specific driver: fear. Holders are watching a steady stream of headlines about crypto kidnappings, exchange hacks, and custody failures, and it’s pushing some of them to hand over the responsibility of holding their coins to a regulated fund instead. 

“People see things happen in the outside world… that motivate them to make this switch for all or some of their holdings,” he said.

It’s worth being clear about the trade-off here. Once Bitcoin goes into the ETF, the holder no longer owns the actual coins. They own shares that track Bitcoin’s price. They can’t withdraw the underlying Bitcoin, spend it, or move it to their own wallet. They’re trading direct ownership for convenience and reduced security risk.

Whether This Should Change How You Think About Your Own Bitcoin

If people managing millions of dollars in Bitcoin are choosing to hand off custody risk to BlackRock, it’s a reminder that securing your own coins takes real diligence, whether that means understanding what a self-custodial wallet actually requires of you or knowing how a hardware wallet protects your keys. 

If you’re curious about the ETF side of things instead, our breakdown of how IBIT works and what it means to hold Bitcoin through BlackRock’s fund is a good next read.

What This Means for You: This doesn’t touch how you buy or hold Bitcoin. If you’re holding Bitcoin on Coinbase or in your own wallet with a balance under $1 million, this swap option simply doesn’t apply to you. It requires a broker or trading desk to execute, and it exists for large holders moving millions of dollars at once, not someone buying a few hundred or a few thousand dollars’ worth of Bitcoin on an app.

Disclaimer: This is not financial or tax advice. If you’re considering a similar move, the tax treatment depends on your individual circumstances, and it’s worth talking to a qualified tax professional before acting.