BlackRock has made it significantly more affordable for large Bitcoin holders to convert their self-custodied holdings into shares of its spot Bitcoin ETF (IBIT), a change prompted by concerns over crypto-related security issues, according to a Bloomberg report.

The minimum Bitcoin value required for a direct swap into IBIT shares dropped to $1 million in July, down from the previous $25 million threshold. Bitwise has also reduced its minimum to $3 million from $100 million, the report noted.

This swapping mechanism operates through «in-kind creation,» allowing investors to transfer their BTC to the fund and receive ETF shares in return. This approach eliminates the need to sell BTC first and then purchase ETF shares, which would trigger capital gains taxes.

These transactions are already experiencing substantial growth. IBIT alone has handled over $5 billion in such swaps, increasing from $3 billion in October, as stated by Robbie Mitchnick, BlackRock’s head of digital assets.

Factors driving this trend include crypto kidnappings, hacks, and custody failures. «People see things happen in the outside world… that motivate them to make this switch for all or some of their holdings,» Mitchnick told Bloomberg.

This pattern extends beyond Bitcoin, with issuers like Grayscale and VanEck now offering similar services for ether.

Spot ETFs have attracted billions in investor capital since their launch in 2024.