BlackRock has recorded $3.6 billion in IBIT in-kind conversions, with security considerations becoming the primary driver.

BlockBeats news, November 10 - According to a report by Barron's, Robbie Mitchnick, head of digital assets at BlackRock, said that since regulators approved in-kind creation and redemption of crypto assets last year, the company has recorded approximately $3.6 billion in in-kind conversions of directly held Bitcoin into shares of its spot Bitcoin ETF IBIT; because BlackRock does not handle all transactions itself and may not see every conversion, the actual scale could be larger. BlackRock also provides in-kind conversions for the iShares Ethereum Trust ETF and iShares Staked Ethereum Trust ETF, but the related scale is far smaller than IBIT. Mitchnick said that related demand continues to rise and is currently at the highest level of interest the company has seen, and does not change with Bitcoin price fluctuations.

Mitchnick said the biggest single motivation is security and peace of mind. Outsourcing custody to an institutional-grade cold storage model is more attractive to holders; holding ETF shares managed by a large fund is generally regarded as lower risk than keeping assets on crypto trading platforms or in always-on hot wallets. He mentioned that the recent Binance hack once again highlighted trading platform risks, although large Bitcoin holders have long understood these risks. The minimum threshold for in-kind conversions has dropped from about $30 million initially to about $1 million to $2 million, with the threshold set by intermediaries facilitating the transactions, Galaxy Digital, Talos, and Virtu. Mitchnick said he hopes the threshold can be reduced to a single ETF share, but the cost structure will be difficult to reduce to zero in the short term.