BlackRock helping Bitcoin whales transition their holdings toward ETFs

• BlackRock is reportedly helping Bitcoin whales pivot to Wall Street by facilitating equal conversion of their coins to ETF shares.
• The move follows the US SEC's approval of in-kind creations and redemptions for crypto ETFs.
• BlackRock has already moved over $3 billion worth of these conversions into its IBIT ETF.

Bitcoin (BTC) whales are reportedly shifting their portfolios from their on-chain wallets to Wall Street through exchange-traded funds (ETFs) from asset managers like BlackRock (BLK).

Bitcoin whales transition to Wall Street, leveraging BlackRock's ETF

Major Bitcoin investors are beginning to shift their holdings from wallets into traditional financial channels, leveraging crypto ETFs to bring their digital asset holdings under regulated management without initially liquidating their assets, Bloomberg reported on Tuesday.

The trend, driven by products from firms like BlackRock, signals a growing convergence between digital assets and conventional finance.

BlackRock's head of digital assets, Robbie Mitchnick, said the firm has already facilitated over $3 billion in conversions into its iShares spot Bitcoin ETF (IBIT), according to Bloomberg.

After years of managing their holdings independently, many large Bitcoin investors are now turning to regulated investment vehicles for added security and institutional oversight. Mitchnick stated that these investors are seeing "the convenience of being able to hold their exposure within their existing financial adviser or private-bank relationship," according to Bloomberg.

He noted that client interest varies widely, ranging from investors seeking to move about 20% of their Bitcoin holdings into ETFs to others aiming to transition entirely into traditional finance structures.

Investors can maintain their Bitcoin exposure while integrating it into the traditional financial system by exchanging their BTC for ETF shares. Once held in a brokerage account, the position can be leveraged for loans, used as collateral, or easily included in estate planning.

The report attributes this shift to the US Securities & Exchange Commission's (SEC) rule change that now permits in-kind creations and redemptions for crypto ETFs.

The update enables authorized participants to swap ETF shares directly for Bitcoin instead of cash, improving the efficiency of large transactions while offering greater tax advantages for institutional investors.

"If you bring your $5 million worth of Bitcoin into a Bitcoin ETF, and you now hold that on your wealth management platform, you qualify for a much higher level of service," said Bitwise President Teddy Fusaro.

BlackRock's iShares Bitcoin ETF (IBIT) became the firm's most profitable fund, generating $245 million in annual revenue. The fund is also nearing a major milestone, with assets under management (AUM) approaching $100 billion in just over 400 days of trading.

Bitcoin is trading near $108,500 in the Asian session on Wednesday, up 0.2% over the past 24 hours at the time of publication.