Lower Minimums Make In‑Kind Bitcoin ETF Conversions More Accessible, $5 B Processed So Far

Wall Street’s Bitcoin exchange‑traded products (ETPs) have become significantly more reachable for institutional investors after two major providers slashed the minimum size required for in‑kind conversions.

Minimums reduced by 96‑97%

BlackRock announced a reduction of its qualifying‑holder threshold for the iShares Bitcoin Trust (IBIT) from $25 million to $1 million, a 96 % cut. Bitwise followed with a steeper reduction for its Bitcoin Trust (BITB), moving the floor from $100 million to $3 million after an interim $50 million step, representing a 97 % decrease.

How in‑kind conversions work

Qualified holders transfer Bitcoin to an authorized participant, which deposits the coins into the trust’s trading account. In return, the trust issues ETF shares that settle directly into the holder’s brokerage account, eliminating the need to sell Bitcoin, wire cash, and repurchase exposure.

Scale of activity

• BlackRock reports that its IBIT conversion program has processed more than $5 billion to date.
• Bitwise’s conversion volume has not been disclosed.
• Other services, such as a Morgan Stanley–Galaxy referral program, now accept $5 million minimums, down from $25 million.

Cost considerations

• IBIT charges an annual sponsor fee of 0.25 % (approximately $2,500 on a $1 million conversion).
• BITB’s annual fee is 0.20 % (about $6,000 on a $3 million conversion).
• In‑kind conversions can defer taxable events, but tax outcomes depend on the holder’s structure and require professional advice.

Implications for custody and security

Moving Bitcoin into an ETF shifts custody responsibilities from the individual to the fund’s custodians, reducing exposure to physical threats such as kidnappings or home invasions. However, the concentration of assets in a few custodial providers—primarily Coinbase, Anchorage, BitGo, Gemini and others—means that systemic custody risk remains a consideration.

Market impact

Recent inflows into U.S. spot Bitcoin ETFs have been strong, with $2.57 billion entering the sector over a nine‑day period in August, $1.82 billion of which went into IBIT. The lower entry thresholds enable existing Bitcoin holders to place their coins into these funds while new capital continues to flow in from fresh investors.

Overall, the reduced minimums make in‑kind Bitcoin ETF conversions 25 times easier for a broader class of institutional clients, while more than $5 billion has already moved from private wallets into regulated funds.