BlackRock Cuts Minimum for In-Kind Bitcoin-to-IBIT Swaps to $1 Million

BlackRock has lowered the minimum size for in-kind exchanges into its spot Bitcoin ETF, giving bitcoin holders a new on-ramp into the iShares Bitcoin Trust (IBIT) without selling first. The threshold has been reduced to $1 million from $25 million. Robbie Mitchnick, BlackRock's head of digital assets, disclosed the change on Bloomberg's "ETF IQ" on Aug. 10, saying the firm would like to push the minimum lower over time. Bloomberg ETF analyst Eric Balchunas highlighted the update after the broadcast. The process is handled through authorized participants—large trading firms that create and redeem ETF shares. Investors deliver Bitcoin and receive IBIT shares in return, with no market sale; the mechanism can also be used in reverse. In-kind functionality for crypto ETFs is still relatively new. U.S. spot Bitcoin ETFs debuted in January 2024 using a cash-only model, and the SEC allowed in-kind swaps for crypto ETFs in July 2025. The shift comes as U.S. spot Bitcoin ETFs saw more than $850 million of net inflows last week, their strongest week since April, according to SoSoValue. The funds now hold about $78 billion worth of bitcoin. Flows have remained volatile, with the group posting $145 million of net outflows on Aug. 10. Security concerns have also been a factor. TRM Labs said hackers drained roughly $116 million in Bitcoin from more than 5,200 Coldcard hardware wallets, an incident that rattled confidence in self-custody. Tax treatment is a key draw. IBIT is structured as a grantor trust, meaning the IRS generally treats shareholders as owning a pro-rata share of the underlying Bitcoin. Selling Bitcoin for cash typically triggers capital gains; an in-kind contribution into IBIT may not, although the position is not formally confirmed by an IRS ruling. Crypto tax specialist Clinton Donnelly, who posts under the CryptoTaxFixer account, said the current view is that an in-kind contribution of Bitcoin to IBIT is non-taxable, with basis and holding period carrying over, subject to the fund's grantor trust treatment. Balchunas echoed that it is a deferral rather than an elimination of taxes because the original cost basis carries through. Traditional stock and bond funds generally cannot mirror the approach because most are structured as open-end funds rather than grantor trusts. Bitcoin (BTC) traded near $63,602 on Tuesday, down 1.2% over the day. If minimums continue to fall, upcoming flow data may indicate how much cold-storage Bitcoin migrates into the ETF wrapper.