Bitcoin whales are quietly transferring over $3 billion worth of Bitcoin directly into BlackRock's iShares Bitcoin ETF (IBIT) through in-kind conversions, bypassing exchanges and over-the-counter desks. According to Bloomberg, this method, approved by the SEC starting in July, allows investors to swap their Bitcoin for ETF shares without triggering a sale or tax event, preserving their holdings while integrating into traditional finance.
Robbie Mitchnick, BlackRock's head of digital assets, confirmed the firm has facilitated more than $3 billion in these conversions, with some investors moving 20% of their holdings and others going "100/zero" by shifting all their Bitcoin into the regulated wrapper. He emphasized the convenience for clients who want to consolidate assets within existing financial adviser or private-bank relationships, enabling access to borrowing, estate planning, and enhanced services.
Other asset managers are witnessing similar trends. Bitwise Asset Management reports daily inquiries and completed its first in-kind deal in August, while Galaxy has handled several conversions. Teddy Fusaro of Bitwise highlighted how moving Bitcoin into ETFs can elevate clients' wealth management status, citing an example where a $1 million client with $5 million in Bitcoin could qualify for higher service levels.
BlackRock's IBIT has become the fastest ETF to surpass $70 billion in assets under management, now exceeding $88 billion, driven by institutional demand. The shift reflects a broader move away from self-custody, with on-chain data showing a break in the 15-year uptrend of self-custodied Bitcoin. Wes Gray of Alpha Architect noted the irony, as Bitcoin was created to escape traditional finance, but its largest holders are now seeking reintegration.
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