Blackrock has cut the in-kind conversion minimum on its iShares Bitcoin Trust (IBIT) from $25 million to $1 million, a 96% reduction that opens direct bitcoin-for-shares redemption to a much wider pool of institutions. The change lands as IBIT extends a strong run of inflows into the world's largest spot bitcoin ETF.
Blackrock has slashed the in-kind conversion minimum on IBIT to $1 million, down 96% from the prior $25 million threshold. The cut lets far smaller institutions swap bitcoin directly for IBIT shares instead of settling in cash.
Mitchnick confirms the change
Robbie Mitchnick, Blackrock's head of digital assets, disclosed the change during a Bloomberg Television appearance: "Bitcoiners can do in-kind exchanges of BTC for IBIT for $1 million minimum now."
In-kind conversion lets an authorized participant, typically a large bank or trading firm licensed to create and redeem ETF shares directly with the issuer, hand over actual bitcoin and receive IBIT shares in return. Regulators cleared Blackrock and other issuers to offer this mechanism on their spot bitcoin ETFs earlier in 2026, and IBIT has steadily expanded who can use it since.
Why the minimum mattered
At $25 million, in-kind conversion was effectively reserved for large market makers and institutional trading desks capable of moving that much bitcoin at once. Dropping the threshold to $1 million brings a broader set of authorized participants and mid-sized institutions into the mechanism.
As a result, more participants can arbitrage the fund directly against the asset it holds, so pricing discrepancies get corrected faster. That should benefit ordinary IBIT shareholders through better secondary-market liquidity and narrower bid-ask spreads over time.
Converting bitcoin directly into IBIT shares in kind can also avoid triggering a taxable cash sale for institutions that already hold the asset, a structural advantage cash-settled ETFs cannot offer. Blackrock has said it intends to keep pushing the threshold down further, with Mitchnick previously stating the firm hopes to eventually make in-kind conversion available at any transaction size.
IBIT extends its inflow streak
The cut lands in the middle of a strong run for Blackrock's flagship bitcoin product. IBIT captured $479 million across a three-day stretch last week, roughly 76% of total spot bitcoin ETF inflows during that window. Spot bitcoin ETFs as a group logged five consecutive days of net inflows in early August, pulling in more than $750 million on the week even as bitcoin's price wobbled below $65,000.
The contrast with Grayscale's GBTC has been stark: the fund has bled roughly $27.47 billion in cumulative outflows since its 2024 conversion to an ETF wrapper, with investors rotating into lower-fee products like IBIT. A cheaper, more liquid in-kind mechanism gives Blackrock another edge in that competition, since institutions that already hold bitcoin directly can now move into IBIT shares without first unwinding their position for cash.
Source: Bitcoin News
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