Some large bitcoin holders are moving coins into spot exchange-traded funds through in-kind creations, converting off-platform BTC into brokerage-account assets they can borrow against or include in estate plans, Bloomberg reported Tuesday.
The mechanics rest on a summer policy shift.
On July 29, 2025, the U.S. Securities and Exchange Commission (SEC) announced the decision to approve orders allowing in-kind creations and redemptions for crypto-asset exchange-traded product (ETP) shares, a policy which covers spot bitcoin exchange traded funds (ETFs).
The agency called the change a break from earlier cash-only approvals for spot bitcoin and ether and an alignment with long-standing practice for commodity ETPs.
In practice, the SEC said authorized participants can deliver or receive the underlying asset, rather than cash, when creating or redeeming ETP shares. SEC Chair Paul Atkins said the shift would make products “less costly and more efficient,” while Trading and Markets Director Jamie Selway called it an “important development” that adds flexibility for issuers and investors.
Against that backdrop, Bloomberg reported that some whales are handing BTC to ETFs and receiving fund shares without selling, a structure the outlet noted is generally tax-neutral because no sale is recorded. The exposure stays the same, but it appears in a brokerage account where it can be pledged as collateral or folded into estate planning, Bloomberg said.
Activity is already visible, Bloomberg reported. BlackRock has facilitated more than $3 billion of such conversions, its head of digital assets Robbie Mitchnick said. Bitwise told Bloomberg it is getting daily inquiries from clients who want holdings reflected on wealth platforms. Galaxy has processed a handful of transactions, Bloomberg added, citing Michael Harvey.
Some clients shift only a slice of holdings; a “subset” consolidates entirely because “it’s the easiest way” to hold going forward, Mitchnick told Bloomberg.
Bitwise President Teddy Fusaro said there are “benefits of having things in the traditional financial system,” including how clients are serviced by private banks.
Banks already play a limited role in facilitating these trades — particularly on creations — even as only non-bank broker-dealers can currently complete the full process, Bloomberg added.
Neither BlackRock, Bitwise nor Galaxy immediately responded to CoinDesk’s request for comment.