Converting Bitcoin directly into fund shares without selling it first, a transaction known as an in-kind conversion, just became accessible to a much broader range of investors. BlackRock lowered the entry point for this process with its iShares Bitcoin Trust ETF ($IBIT) from $25 million to $1 million in July, Bloomberg reported on August 25, 2026. The fund has now processed more than $5 billion of these conversions, up from more than $3 billion when Bloomberg first covered the trend in October.
The 96% reduction is the headline change. Here is what that means: a service previously available only to holders with at least $25 million to move is now within reach of family offices and wealthier individual investors.
What is motivating the switch
Robbie Mitchnick, BlackRock's head of digital assets, pointed to security and custody concerns as part of what drives holders to convert. He cited "kidnappings, ransom demands, and custody failures" as reasons some move their Bitcoin out of private wallets and into a regulated fund. The conversion keeps price exposure to $BTC in place while handing custody responsibility to a professional structure.
The process is slow. Mitchnick said conversions can take more than a week. Bitwise chief investment officer Matt Hougan described the industry-wide workflow as "still bespoke, from introducing a client to a market maker to working with the adviser, but it's becoming more standardized."
Competition is intensifying
BlackRock did not move alone. Rival issuer Bitwise cut its conversion minimum from $100 million to $3 million, a steeper proportional reduction. Bitwise's new floor of $3 million remains above BlackRock's $1 million, but both firms are competing for the same pool of holders deciding where to send their coins.
IBIT holds roughly 3.645% of Bitcoin's total supply and lists net assets of $60.65 billion. That scale may make it the default destination for many converting holders.
One structural limit on the growth: BlackRock's fees from IBIT track Bitcoin's price. A meaningful decline in $BTC would shrink assets under management and compress the revenue attached to this channel, making it less predictable than traditional fund flows.
Insider Monkey's database shows BlackRock was held by 84 hedge funds in the second quarter of 2026, up from 79 in the first quarter. Coinbase, the most direct publicly traded comparison for crypto-linked institutional exposure, was held by 62 funds over the same period, down from 65 in the prior quarter.