BlackRock: Security Fears Drive Bitcoin Whales Into IBIT

Large bitcoin holders are exchanging the digital assets they guard themselves for shares of BlackRock’s iShares Bitcoin Trust (IBIT) at a record pace, according to the firm’s head of digital assets, as safety concerns push security to the forefront. Robbie Mitchnick stated that the current demand for these in-kind conversions is at its highest point yet and has been moving steadily upward. Of all the reasons provided by clients, the single most common motivation is security and peace of mind.

These transactions involve an in-kind conversion where a holder delivers bitcoin to the fund through an intermediary in exchange for newly created IBIT shares without first liquidating the coins for cash. BlackRock utilizes Galaxy Digital, Talos, and Virtu to process these transactions, with those participating firms establishing the minimum trade size. While minimum investment thresholds initially started around $30 million, they have since lowered to between $1 million and $2 million.

Rising security concerns and physical threats are driving large bitcoin holders to trade self-custody for BlackRock shares.

Baron’s reported that the volume processed by BlackRock has reached $3.6 billion, though the actual figure could be higher since the firm does not handle every conversion directly. In August, Mitchnick noted that IBIT had facilitated more than $5 billion of such swaps, up from over $3 billion in October 2025. He previously highlighted outside threats such as kidnappings, ransoms, and custody failures as drivers for the switch.

Tax considerations and estate planning also play a role in the trend. Converting appreciated bitcoin into IBIT in kind is generally not treated as a taxable sale triggering capital-gains taxes, though outcomes depend on individual investor circumstances. Furthermore, Mitchnick pointed out that estate planning becomes much simpler when holding exposure within a private bank. Once inside the fund, the underlying coins are stored with an affiliate of Coinbase Prime in an institutional-grade cold-storage model.

This shift runs counter to the foundational philosophy of bitcoin, which emphasizes holding money without relying on a bank. Investors who complete the conversion trade the risk of managing their own private keys for a brokerage claim, placing their trust instead in BlackRock, its custodian, and the intermediary market makers. Meanwhile, U.S. spot bitcoin ETFs saw outflows recently, with IBIT accounting for the majority of the losses during a challenging week for the sector.

Why it matters

The rising trend of institutional and high-net-worth investors abandoning self-custody in favor of regulated financial wrappers highlights a major psychological shift in the digital asset market. As physical security threats against crypto holders increase globally, the reliance on traditional financial institutions and custody providers is reshaping how large participants store wealth.