Some large bitcoin holders are transferring coins to spot exchange-traded funds through in-kind creations, converting off-platform BTC into brokerage account assets that they can borrow against or include in estate plans, Bloomberg reported Tuesday.
The mechanics are based on a summer policy change.
On July 29, 2025, the US Securities and Exchange Commission (SEC) announced the decision to approve orders allowing in-kind creations and redemptions of shares of crypto-asset exchange-traded products (ETPs), a policy that covers spot bitcoin exchange-traded funds (ETFs).
The agency called the change a break from previous 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, instead of cash, when creating or redeeming ETP shares. SEC Chairman Paul Atkins said the change would make the products “less expensive and more efficient,” while Trading and Markets Director Jamie Selway called it an “important development” that adds flexibility for issuers and investors.
In that context, Bloomberg reported that some whales are delivering BTC to ETFs and receiving fund shares without selling them, a structure that the outlet noted is generally tax neutral because no sales are recorded. The exposure remains the same, but it appears in a brokerage account where it can be offered as collateral or incorporated into estate planning, Bloomberg said.
The activity is already visible, Bloomberg reported. BlackRock has facilitated more than $3 billion in such conversions, its head of digital assets, Robbie Mitchnick, said. Bitwise told Bloomberg that it receives daily inquiries from clients who want their holdings to be reflected on wealth platforms. Galaxy has processed a handful of transactions, Bloomberg added, citing Michael Harvey.
Some clients transfer only a portion of their holdings; a “subset” is fully consolidated because “it’s the easiest way” to sustain itself in the future, Mitchnick told Bloomberg.
Bitwise President Teddy Fusaro said there are “benefits to having things in the traditional financial system,” including the way private banks serve customers.
Banks already play a limited role in facilitating these transactions, especially in originations, even though currently only non-bank brokers can complete the entire process, Bloomberg added.
Neither BlackRock, Bitwise nor Galaxy immediately responded to CoinDesk’s request for comment.
