Large Bitcoin holders are shifting from physical settlement to ETF shares, with BlackRock facilitating over $3 billion in related conversions.

Foresight News: According to Bloomberg, some large bitcoin holders are currently exchanging their bitcoin holdings for ETF shares through physical delivery. A regulatory change this summer allowed large investors to deliver bitcoin to ETFs in exchange for fund shares, a process known as physical delivery. This applies to most ETFs, but was only approved for bitcoin products starting in July this year. The process is typically tax-neutral, requires no cash transactions, and does not require recording a sale. After conversion, these assets, which were previously volatile digital assets, become assets on brokerage statements that are easier to use for margin loans, as collateral, or to pass on to heirs. When assets are stored in private digital wallets, these operations become cumbersome, risky, or even impossible. The ETF wrapper provides legitimacy and convenience, turning previously obscure wealth into assets that banks and advisors can handle.

According to Robbie Mitchnick, Head of Digital Assets at BlackRock, BlackRock has facilitated over $3 billion in such conversions. Bitwise Asset Management stated that investors are now inquiring daily about how to transfer their holdings to wealth management platforms. Michael Harvey, Head of Principal Trading at liquidity provider Galaxy, said the company has so far handled a small number of conversions.