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BTC BlackRock reduces the minimum threshold for converting Bitcoin into ETF shares from US$25 million to US$1 million
After completing related conversions of more than US$5 billion, BlackRock significantly lowered the minimum threshold for converting Bitcoin into ETF shares from US$25 million to US$1 million.
Core Points:
BlackRock lowered the physical conversion threshold for its iShares Bitcoin Trust by 96%, opening the service to a wider range of holders.
The cumulative conversion volume of bitcoin to ETF through the fund has exceeded US$5 billion, about double the total in October last year.
As hardware wallet failures occurred frequently during the summer, prompting holders to switch to regulated custody services, Bitwise and Morgan Stanley have lowered their respective thresholds accordingly.
Bitcoin ETF conversion threshold dropped to US$1 million
The asset management company lowered the physical purchase threshold of its iShares Bitcoin Trust (transaction code IBIT) as early as July this year. Details of the adjustment, which dropped by 96%, were disclosed this week. The adjustment applies to the fund's subscription process, not ordinary stock purchases made on Nasdaq (the latter has no minimum limit requirement).
Physical subscriptions allow eligible holders to hand over bitcoin to the fund and exchange it for the corresponding shares without first selling bitcoin for cash. This structure deferring capital gains taxes that may be triggered by sales and eliminating the burden of keeping mnemonics and hardware wallets.
Regulators opened the door in July 2025, when the U.S. Securities and Exchange Commission allowed physical purchases and redemptions of spot cryptocurrency exchange-traded products. Only authorized participants can trade directly with trust funds, so holders still need to arrange conversions through a broker or trading desk.
As of August 25, the fund held approximately US$60.65 billion in net assets, charged a 0.25% management fee, and each subscription basket contained approximately 22.65 bitcoins.
BlackRock executives: Bitcoin conversion needs are related to custody security incidents
Robbie Michnik, head of digital assets at BlackRock, said that the total amount processed by IBIT through these transactions has exceeded $5 billion, up from about $3 billion in October last year. He linked the need to kidnapping, extortion cases and failed custody incidents that prompted holders to transfer some or all of their assets into a regulated custody framework.
Competitors have also followed suit. Bitwise lowered its threshold from $100 million to $3 million, and Morgan Stanley also lowered its threshold. According to Gray's head of investment trading and capital markets, the company's physical settlement accounted for 62% of total Bitcoin subscriptions in June from 28% in March.
Coldcard security vulnerability reshapes Bitcoin's self-custody landscape
These conversions do not create new demand for Bitcoin because they simply repackage existing supplies. What has really changed this summer is the safe image of the alternative (self-hosting).
Attackers began exploiting a 2021 firmware vulnerability in Coinkite's Coldcard wallet on July 30 to steal approximately 1816 bitcoins, worth approximately $116 million, from more than 5200 addresses. Glassnode data showed that in the following week, about 210,000 bitcoins flowed out of the wallets of long-term holders, the largest weekly outflow for this group since December 2024. Analysts believe the outflow was a custody transfer rather than a sell-off, as bitcoin trading prices were around $64,000 at the time, about 50% lower than the historical high in October 2025.
