Large bitcoin holders are swapping coins they hold themselves for shares of BlackRock's iShares Bitcoin Trust (IBIT) at a record pace, according to the firm's head of digital assets. Security concerns top the reasons clients give. The in-kind trades also mean headline flow figures overstate new cash entering the fund.
Large holders are moving bitcoin into IBIT at a record pace, BlackRock's head of digital assets said Monday. Kidnappings and hacks are pushing security to the top of their list.
Robbie Mitchnick told Barron's that demand for the swaps has sort of been one way, and that way is up. Of the reasons clients give for converting, according to Mitchnick: "the single largest one is security and peace of mind."
How the in-kind swaps work
In these trades, a holder delivers bitcoin to the fund through an intermediary and receives newly created IBIT shares without first selling the coins for cash. BlackRock relies on Galaxy Digital, Talos and Virtu to handle the transactions, and those firms set the minimum size.
The SEC voted on July 29, 2025 to let spot bitcoin and ether funds create and redeem shares in kind. Before that, the funds used a cash-only structure from their launch in January 2024.
Access has widened since. BlackRock's minimum started around $30 million and now hovers between $1 million and $2 million, Barron's reported.
Taxes are part of the pitch. Barron's wrote that converting appreciated bitcoin in kind generally isn't seen as a sale that would trigger capital gains taxes, while Bloomberg cautioned that avoiding an immediate bill depends on the investor's circumstances.
Why the flow numbers overstate demand
Barron's put the volume BlackRock has seen at $3.6 billion, noting the real figure could be larger because the firm does not process every conversion itself. In August, Mitchnick told Bloomberg that IBIT had facilitated more than $5 billion of such swaps, up from more than $3 billion in October 2025.
An in-kind creation adds IBIT shares and counts toward the fund's reported flows, but no bitcoin is bought on the open market. The coins already existed and changed wrappers, so headline flow figures overstate new cash.
Cash has moved the other way. U.S. spot bitcoin ETFs lost about $1.28 billion in the week ended Nov. 6, their worst week since June, and IBIT accounted for about $1.21 billion of that, Farside Investors data shows.
Fears behind the move
French authorities have recorded 77 crypto-linked kidnappings, extortion cases and home invasions so far in 2026, more than in all of 2025, the OCCRP reported. The shift cuts against bitcoin's founding pitch of holding money without a bank, because holders who convert give up their private keys for a brokerage claim. They trade the risk of self-custody for reliance on BlackRock, its custodian and the market makers in between.
Source: Bitcoin Magazine
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