Wall Street is making it easier for bitcoin whales to ditch self-custody: report

BlackRock has made it a lot cheaper for bitcoin whales to swap self-custody for shares in its Nasdaq-listed spot BTC ETF, IBIT, a shift that’s accelerating due to crypto crime, according to a report by Bloomberg.

The minimum value of bitcoin needed to swap directly into IBIT shares slipped to $1 million in July. It used to be $25 million, the report said, adding that ETF issuer Bitwise has also cut its threshold to $3 million from $100 million.

The swapping works through a process called “in-kind creation,” where investors hand over their BTC to the fund and get ETF shares back. This way they don’t need to sell their BTC and then buy ETF shares, which attracts capital gains tax.

Such transactions are already booming. IBIT alone has processed more than $5 billion of these swaps, up from $3 billion back in October, according to Robbie Mitchnick, BlackRock's head of digital assets.

Driving the trade is 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.