"A quiet migration is underway among Bitcoin's wealthiest holders - from cold storage to custodians. A new wave of U.S. exchange-traded funds (ETFs) is allowing longtime Bitcoiners to fold their holdings into the traditional financial system without selling a single sat. The change comes after regulators approved "in-kind" transactions for spot Bitcoin ETFs this summer, a mechanism that lets investors deposit Bitcoin directly into a fund in exchange for shares, according to Bloomberg reporting."
"This mechanism is a tax-neutral move standard across equities and commodities ETFs. The result: volatile digital assets become regulated, reportable holdings on brokerage statements, instantly easier to borrow against, pledge as collateral, or include in estate plans. BlackRock, the world's largest asset manager, has already processed over $3 billion worth of these conversions, according to Robbie Mitchnick, head of digital assets at the firm. Bitwise Asset Management says it now fields daily inquiries from investors looking to bring private Bitcoin holdings into managed portfolios."
"The shift marks another ironic evolution for Bitcoin - the asset designed to exist outside the banking system is now being absorbed by it. As ETFs integrate Bitcoin into brokerage infrastructure, even many anti-establishment investors are realizing that some of TradFi's tools - custody, leverage, and estate planning - can't easily be replicated on-chain. Some holders are transferring only part of their Bitcoin, while others are consolidating everything into ETFs for simplicity."
Large Bitcoin holders are moving coins from cold storage into custodial spot ETFs using newly approved in-kind transactions that let investors deposit Bitcoin directly into funds in exchange for shares. The in-kind mechanism is tax-neutral and common across equity and commodity ETFs. Converting private holdings into ETF shares makes Bitcoin regulated and reportable on brokerage statements and immediately usable for borrowing, pledging as collateral, or estate planning. Asset managers and liquidity providers including BlackRock, Bitwise, and Galaxy are facilitating conversions and fielding investor inquiries. Some holders transfer portions while others consolidate entire holdings, increasing Wall Street's integration with Bitcoin.
Read at Bitcoin Magazine
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