Key Takeaways
- • BlackRock has recorded approximately $3.6 billion in Bitcoin-to-IBIT conversions since the SEC authorized in-kind cryptocurrency ETF transactions in July 2025, according to Crypto News reporting, with security concerns cited as the primary driver.
- • Robbie Mitchnick, BlackRock's head of digital assets, told Barron's on November 9 that interest in conversions is "the highest we've seen at any point," and that the true figure may be higher because BlackRock does not track every intermediary transaction.
- • IBIT recorded $213.2 million in net outflows on November 9, its seventh consecutive session of withdrawals and roughly $1.66 billion since October 30, per Farside Investors.
- • The practical minimum for conversions has fallen from about $30 million to roughly $1 million to $2 million, widening access beyond the largest holders.
- • Grayscale extended in-kind contributions to ten digital asset products on October 21, citing growing cybersecurity threats around self-custody and DeFi.
Summary
BlackRock has reported record demand from large Bitcoin holders seeking to convert their coins into shares of its iShares Bitcoin Trust (IBIT), with approximately $3.6 billion in conversions recorded since US regulators authorized in-kind transactions for crypto exchange-traded products in July 2025. Robbie Mitchnick, BlackRock's head of digital assets, told Barron's on November 9 that demand has reached record levels despite recent cryptocurrency price declines. He identified "security and peace of mind" as the main reasons investors request the service, particularly those seeking alternatives to managing private keys and holding large balances in personal wallets. The reported figure may understate activity, as BlackRock does not directly process or track every transaction completed through its intermediaries.
In a conversion, eligible investors transfer existing Bitcoin into the ETF structure and receive shares representing that exposure. The process runs through authorized participants and other approved intermediaries. BlackRock works with firms including Galaxy Digital, Talos and Virtu, and minimum requirements depend on the intermediary. The practical minimum has fallen from roughly $30 million to around $1 million to $2 million, according to the report, and Crypto News previously noted that BlackRock lowered its threshold during 2026 as institutional demand developed.
The conversion demand coincides with sustained withdrawals from US spot Bitcoin ETFs. According to Farside Investors, IBIT recorded $213.2 million in net outflows on November 9, its seventh consecutive trading session of withdrawals, bringing the total since October 30 to approximately $1.66 billion. Across the spot Bitcoin ETF market, Monday's net outflows reached $201 million, with Morgan Stanley's MSBT attracting $22.1 million. During the first trading week of November, the products recorded about $1.28 billion in net withdrawals, with IBIT accounting for roughly $1.21 billion, as Bitcoin traded near $75,000. The report notes that conversions and net flows measure different activities: a conversion changes how an existing holder owns the asset without necessarily adding new capital to crypto.
The SEC approved in-kind creations and redemptions for crypto exchange-traded products on July 29, 2025. Previously, US spot Bitcoin and Ethereum funds generally used cash-based arrangements. Under the framework, authorized participants can deliver the underlying cryptocurrency to create shares or receive it on redemption. SEC Chairman Paul Atkins said the changes would make the products "less costly and more efficient." For eligible holders, the process allows Bitcoin exposure to move into brokerage accounts without a prior cash sale, and shares may be used alongside other securities, subject to permitted collateral, estate planning or options strategies. Tax treatment depends on the transaction structure, and an in-kind transfer does not automatically avoid a taxable event.
Other asset managers have introduced similar services. On October 21, Grayscale announced in-kind contributions across ten digital asset products, including funds linked to Bitcoin, Ethereum, Solana, XRP, Avalanche, Chainlink, Dogecoin, Hyperliquid, Sui and Zcash. As of October 20, Grayscale's published minimums ranged from about $80,300 for its Solana Staking ETF to $364,800 for its Bitcoin Mini Trust ETF. Steve Vanourny, Grayscale's head of index, cited "growing cybersecurity threats" involving self-custody and decentralized finance platforms as a reason institutional custody is becoming more relevant.
In a conversion, eligible investors transfer existing Bitcoin into the ETF structure and receive shares representing that exposure. The process runs through authorized participants and other approved intermediaries. BlackRock works with firms including Galaxy Digital, Talos and Virtu, and minimum requirements depend on the intermediary. The practical minimum has fallen from roughly $30 million to around $1 million to $2 million, according to the report, and Crypto News previously noted that BlackRock lowered its threshold during 2026 as institutional demand developed.
The conversion demand coincides with sustained withdrawals from US spot Bitcoin ETFs. According to Farside Investors, IBIT recorded $213.2 million in net outflows on November 9, its seventh consecutive trading session of withdrawals, bringing the total since October 30 to approximately $1.66 billion. Across the spot Bitcoin ETF market, Monday's net outflows reached $201 million, with Morgan Stanley's MSBT attracting $22.1 million. During the first trading week of November, the products recorded about $1.28 billion in net withdrawals, with IBIT accounting for roughly $1.21 billion, as Bitcoin traded near $75,000. The report notes that conversions and net flows measure different activities: a conversion changes how an existing holder owns the asset without necessarily adding new capital to crypto.
The SEC approved in-kind creations and redemptions for crypto exchange-traded products on July 29, 2025. Previously, US spot Bitcoin and Ethereum funds generally used cash-based arrangements. Under the framework, authorized participants can deliver the underlying cryptocurrency to create shares or receive it on redemption. SEC Chairman Paul Atkins said the changes would make the products "less costly and more efficient." For eligible holders, the process allows Bitcoin exposure to move into brokerage accounts without a prior cash sale, and shares may be used alongside other securities, subject to permitted collateral, estate planning or options strategies. Tax treatment depends on the transaction structure, and an in-kind transfer does not automatically avoid a taxable event.
Other asset managers have introduced similar services. On October 21, Grayscale announced in-kind contributions across ten digital asset products, including funds linked to Bitcoin, Ethereum, Solana, XRP, Avalanche, Chainlink, Dogecoin, Hyperliquid, Sui and Zcash. As of October 20, Grayscale's published minimums ranged from about $80,300 for its Solana Staking ETF to $364,800 for its Bitcoin Mini Trust ETF. Steve Vanourny, Grayscale's head of index, cited "growing cybersecurity threats" involving self-custody and decentralized finance platforms as a reason institutional custody is becoming more relevant.
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