Robbie Mitchnick, Head of Digital Assets at BlackRock, announced this change yesterday on Bloomberg Television, stating:
"Bitcoin users can now exchange BTC for IBIT for a minimum of $1 million. Previously, this threshold was $25 million."
An in-kind exchange allows an authorized participant to deliver actual bitcoins and receive IBIT shares in return, instead of settling the transaction in cash. An authorized participant is typically a large bank or trading firm licensed to create and redeem shares of an exchange-traded fund (ETF) directly with the issuer.
Earlier in 2026, regulators permitted BlackRock and other issuers to offer this mechanism for their spot bitcoin ETFs, and since then, the iShares Bitcoin Trust has gradually expanded the pool of those who can use it.
Why the Minimum Threshold Mattered
With a $25 million threshold, in-kind conversions were effectively only available to large market makers and institutional trading desks capable of moving that amount of bitcoin at once. Lowering the threshold to $1 million opens the mechanism to a much broader set of authorized participants and mid-sized institutional investors.
The practical result is a tighter link between the price of IBIT shares and the underlying spot price of bitcoin. When more participants can arbitrage the fund directly against the assets it holds, price discrepancies correct faster, which should benefit regular IBIT shareholders over time through improved secondary market liquidity and narrower bid-ask spreads.
There is also a tax consideration: for example, directly converting bitcoin into IBIT shares in-kind allows institutions already holding the asset to avoid the tax event triggered by selling for cash—a structural advantage not offered by cash-settled ETFs.
BlackRock has stated its intention to lower this threshold further; Mitchnick noted previously that the firm hopes to eventually make in-kind conversion available "for any size trade."
IBIT Inflow Streak Continues
The lowering of the minimum threshold comes amid strong momentum for BlackRock's flagship bitcoin product. Last week, IBIT attracted $479 million over three days, accounting for roughly 76% of total spot bitcoin ETF inflows during that period. In early August, spot bitcoin ETFs as a whole also recorded five consecutive days of net inflows, pulling in over $750 million for the week, even as the bitcoin price fluctuated below the $65,000 mark.
A stark contrast is seen with Grayscale's GBTC fund: since its conversion to an ETF in 2024, the fund has lost approximately $27.47 billion in cumulative outflows as investors rotate into lower-fee products like IBIT. A cheaper and more liquid in-kind investment mechanism gives BlackRock another edge in this competition, as institutional investors already holding bitcoin directly can now transition to IBIT shares more efficiently without first liquidating their positions for cash.
Since its launch in January 2024, IBIT has grown into the largest spot bitcoin ETF by assets, and BlackRock views the product as a flagship within its broader digital asset strategy, which now includes an ether ETF and a growing set of tokenization initiatives.
Looking ahead, the lowering of the minimum threshold is unlikely to be the last change to IBIT's mechanics, as analysts expect BlackRock and competing issuers to continue refining creation and redemption processes as the spot bitcoin ETF market matures and daily trading volumes grow. Experts note that the growth of in-kind activity is a metric to watch, as an increasing proportion of in-kind versus cash-based creations and redemptions is generally seen as a sign of a more efficient and mature market structure.
