$3B in Bitcoin quietly flows into BlackRock’s ETF via in-kind conversions

Bitcoin whales are quietly handing over their coins straight into BlackRock’s ETF machine, not to exchanges, and not to OTC desks.

According to Bloomberg, over $3 billion worth of Bitcoin has already been converted into ETF shares through in-kind transactions, allowing whales to shift their holdings from crypto wallets into brokerage accounts, without triggering a sale or tax event.

This method, only approved for Bitcoin ETFs starting July, lets investors swap coins for ETF shares in a way that keeps their stake intact.

But on the books, what was once seen as volatile and off-grid becomes a clean line item, fully recognized by traditional finance. And that opens up everything: borrowing, estate planning, and even better treatment by private banks.

BlackRock clients bring Bitcoin into the TradFi system

Robbie Mitchnick, head of digital assets at BlackRock, said the firm has already helped clients convert over $3 billion of their Bitcoin using these in-kind transfers.

He noted that some investors are only moving 20% of their holdings into ETF form, but others are “going 100/zero,” putting all of it into the regulated wrapper. “Consolidate everything in this way, it’s the easiest way for me to hold this going forward,” is how Mitchnick described the full switch.

He also said the firm’s been getting a wide range of inquiries from Bitcoin holders looking to bring their assets into the wealth-management world. It’s no longer just the tech-savvy crowd. Many of these people already have private-bank relationships, and they want everything under one roof. “There’s convenience in being able to hold their exposure within their existing financial adviser or private-bank relationship,” Mitchnick said.

Others in the industry are seeing the same trend. Bitwise Asset Management says it’s now receiving daily inquiries about these ETF conversions. Teddy Fusaro, Bitwise’s president, explained how they completed their first in-kind deal with the BITB ETF back in August. He pointed to one investor with $1 million on a wealth-management platform and $5 million in Bitcoin kept separately.

“Your wealth management platform treats you like you’re a $1 million client,” Fusaro said. “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.”

Galaxy, another major player, confirmed it has also handled several conversions. Michael Harvey, the company’s head of franchise trading, said they’ve processed a handful so far and expect more to follow.

Wall Street prepares for wider Bitcoin integration

For now, banks aren’t allowed to handle the full in-kind transaction. Only non-bank broker-dealers can.

But BlackRock confirmed that banks are already helping out in parts of the process, especially when creating new ETF shares. And Mitchnick made it clear that more regulatory clarity would bring in even bigger players. That means more banks, more volume, and more whales moving their Bitcoin into regulated channels.

Wes Gray, CEO of Alpha Architect, which designs ETFs with tax-focused strategies, said: “Life is just easier in TradFi land — we’ve spent a century perfecting integration, access, and security. Bitcoiners are finally realizing that.”

Then Wes added the part no one in crypto really wants to hear out loud: “The great irony, of course, is that Bitcoin was born to escape traditional finance — and now its biggest holders are trying to get back in.”

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