BlackRock reduced the minimum value required for eligible Bitcoin holders to convert their assets into shares of its iShares Bitcoin Trust ETF, or IBIT, to $1 million in July 2026.
96% Reduction in Conversion Threshold
The previous minimum was $25 million, according to a Bloomberg report. The 96% reduction makes the conversion service accessible to a broader group of wealthy investors and institutions. Bitwise reportedly made a similar change, lowering its threshold from $100 million to $3 million. Neither figure represents the minimum investment required to buy ordinary ETF shares through a brokerage account.
Robbie Mitchnick, BlackRock's head of digital assets, told Bloomberg that IBIT had processed more than $5 billion through these transactions. The figure stood near $3 billion in October. Those conversions should not automatically be treated as new cash inflows, as they move existing Bitcoin into the fund in exchange for shares. BlackRock's fund page showed IBIT holding approximately $60.65 billion in net assets as of Aug. 25.
How Bitcoin-to-ETF Conversions Work
The transactions use an in-kind creation process. An eligible holder transfers Bitcoin into the ETF structure and receives IBIT shares representing comparable exposure. The arrangement avoids requiring the holder to sell Bitcoin for cash and then purchase ETF shares separately. The U.S. Securities and Exchange Commission approved in-kind creations and redemptions for spot crypto exchange-traded products in July 2025. The original approvals required funds to use cash.
Only authorized participants can create or redeem IBIT shares directly with the trust. BlackRock's latest quarterly filing confirms that the trust can conduct in-kind transactions with those authorized firms. Bitcoin holders therefore generally need a broker, trading desk or another qualified intermediary to arrange a conversion. Ordinary investors can continue buying and selling IBIT shares on Nasdaq without participating in the creation process.
Tax Treatment Depends on Structure
Bloomberg reported that the conversions can help holders avoid realizing capital gains by selling Bitcoin before purchasing ETF shares. However, that result is not automatically available to every investor. The tax outcome may depend on the investor, intermediary, jurisdiction and legal structure of the exchange. Investors may need individual tax advice before completing a transaction.
The SEC's decision focused on fund efficiency and did not establish special tax treatment for investors. The agency said in-kind processing could lower costs for issuers, authorized participants and shareholders. The statement that a conversion does not attract capital gains tax should therefore be treated as a reported benefit rather than a universal rule.
Security Concerns Drive Movement Away From Self-Custody
Mitchnick said some holders reconsider self-custody after learning about hacks, kidnappings and other attacks involving cryptocurrency owners. People see things happen in the outside world that motivate them to transfer some or all of their holdings, he told Bloomberg. ETFs remove the need to manage seed phrases, hardware wallets and private-key backups.
The trade-off is that investors surrender direct control over their Bitcoin. IBIT shareholders cannot withdraw the underlying coins, use them for payments or move them to personal wallets. They instead own exchange-traded shares whose value is designed to track Bitcoin before fees and expenses. Lower thresholds could encourage more large holders to consider that trade-off. Further adoption will depend on intermediary access, transaction costs, tax treatment and investors' willingness to replace direct ownership with a regulated financial product.
