ETF issuers are reducing the minimum transaction sizes, making it easier for large Bitcoin holders to exchange self-custodied BTC for spot ETF shares.

BlackRock has reportedly lowered the minimum Bitcoin amount required for an in-kind exchange involving its Nasdaq-listed spot Bitcoin ETF, IBIT. Bloomberg reported that the adjustment comes as growing concerns over hacks, theft and other crypto security incidents push investors to reconsider self-custody.

The minimum value of Bitcoin required for an IBIT in-kind creation fell to $1 million in July, down from $25 million previously. Bitwise has also lowered its threshold, cutting it from $100 million to $3 million, according to the report.

An in-kind creation allows investors to deliver Bitcoin directly to the ETF in return for shares. Unlike a traditional transaction, investors do not need to sell their BTC for cash before buying ETF shares, which can help them avoid triggering a capital gains tax event.

The mechanism is already gaining traction. IBIT has processed more than $5 billion in in-kind transactions, compared with roughly $3 billion in October, according to Robbie Mitchnick, BlackRock’s head of digital assets.

Security concerns are helping fuel the shift. Crypto kidnappings, hacks and custody failures have encouraged some Bitcoin holders to reconsider keeping their assets in self-custody. Mitchnick told Bloomberg that such incidents can persuade investors to move part or all of their holdings into ETFs.

The development is also spreading across other crypto assets. Grayscale and VanEck now offer similar in-kind arrangements for ether ETFs.

Since U.S. spot crypto ETFs launched in 2024, the products have attracted billions of dollars in investment, strengthening their position as an alternative to directly holding digital assets.