A quiet migration is underway among Bitcoin’s wealthiest holders — from cold storage to custodians.
A new wave of U.S. exchange-traded funds (ETFs) is allowing longtime Bitcoiners to fold their holdings into the traditional financial system without selling a single sat.
The change comes after regulators approved “in-kind” transactions for spot Bitcoin ETFs this summer, a mechanism that lets investors deposit Bitcoin directly into a fund in exchange for shares, according to Bloomberg reporting.
This mechanism is a tax-neutral move standard across equities and commodities ETFs.
The result: volatile digital assets become regulated, reportable holdings on brokerage statements, instantly easier to borrow against, pledge as collateral, or include in estate plans.
BlackRock, the world’s largest asset manager, has already processed over $3 billion worth of these conversions, according to Robbie Mitchnick, head of digital assets at the firm. Bitwise Asset Management says it now fields daily inquiries from investors looking to bring private Bitcoin holdings into managed portfolios. Liquidity provider Galaxy has also facilitated several such transfers, per Bloomberg.
The shift marks another ironic evolution for Bitcoin — the asset designed to exist outside the banking system is now being absorbed by it.
As ETFs integrate Bitcoin into brokerage infrastructure, even many anti-establishment investors are realizing that some of TradFi’s tools — custody, leverage, and estate planning — can’t easily be replicated on-chain.
Some holders are transferring only part of their Bitcoin, while others are consolidating everything into ETFs for simplicity. This trend could expand Wall Street’s involvement with Bitcoin, bridging the gap between the crypto world and established finance.
BlackRock’s ETF and tokenization push
BlackRock’s iShares Bitcoin Trust ETF (IBIT), launched just 22 months ago, recently reached over $100 billion in assets under management, making it the firm’s most profitable fund.
Generating approximately $244.5 million in annual revenue, IBIT has surpassed long-standing BlackRock ETFs, including the 25-year-old iShares Russell 1000 Growth ETF, in both growth speed and profitability.
Last quarter, the fund also overtook Coinbase Global’s Deribit platform to become the world’s largest venue for Bitcoin options.
On top of this, BlackRock is simultaneously developing technology to tokenize a wide array of assets, from equities and bonds to real estate, aiming to connect the $4.5 trillion global digital wallet market to the U.S.-based investment products.