Some of bitcoin's biggest holders are handing over coins they guard themselves in exchange for shares of BlackRock's iShares Bitcoin Trust (IBIT) at a record pace, according to the firm's head of digital assets, who said kidnappings and hacks have pushed security to the top of their list of concerns.

"The current moment is the highest we've seen at any point," Robbie Mitchnick told Barron's, adding that demand for the swaps "has sort of been one way — up." Of the reasons clients give, he said, "the single largest one is security and peace of mind."

The transactions are in-kind conversions: a holder delivers bitcoin to the fund through an intermediary and receives newly created IBIT shares, without first selling the coins for cash. BlackRock relies on Galaxy Digital, Talos and Virtu to process the trades, and those firms set the minimum size.

Barron's put the volume BlackRock has handled at $3.6 billion, noting the true figure could be higher because the firm does not process every conversion itself. Mitchnick cited a larger number in August, telling Bloomberg that IBIT had facilitated more than $5 billion of such swaps, up from more than $3 billion in October 2025.

In that August interview, Mitchnick named the threats outright: "People see things happen in the outside world — whether it's kidnappings, ransom, custody failures — that motivate them to make this switch for all or some of their holdings."

He told Barron's that the recent Binance hack came as no surprise to large holders. "Most large Bitcoin holders were already acutely aware of the risk of holding on an exchange and in a hot wallet," he said.

How BlackRock's in-kind swaps became possible

The SEC voted on July 29, 2025, to allow spot bitcoin and ether funds to create and redeem shares in kind, ending the cash-only structure it had required since the funds — IBIT among them — launched in January 2024. In-kind creations and redemptions have long been the standard mechanism of conventional ETFs; the vote extended that structure to crypto funds.

Access has broadened since then. BlackRock's minimum ticket, which started at around $30 million, now hovers between $1 million and $2 million, Barron's reported.

Taxes are part of the pitch. Converting appreciated bitcoin into IBIT in kind "generally isn't seen as a sale that would trigger capital-gains taxes," Barron's wrote, though Bloomberg cautioned that avoiding an immediate tax bill depends on the investor's circumstances. Mitchnick also flagged estate planning, calling it "much, much simpler" to hold the exposure "within the confines of their private bank."

Once converted, the coins sit with IBIT's custodian, an affiliate of Coinbase Prime, in what Mitchnick described as an "institutional-grade cold-storage model." The fund, the largest U.S. spot bitcoin ETF by assets, held 795,921 BTC, worth about $60.4 billion, as of Nov. 6.

Why the flow figures overstate demand

An in-kind creation adds IBIT shares and counts toward the fund's reported flows, but no bitcoin changes hands on the open market. The coins already existed and merely switched wrappers, meaning headline flow numbers overstate fresh cash. The mechanic runs in reverse as well: an in-kind redemption removes shares and hands bitcoin back from the fund's custody, without the fund having to sell coins on the open market.

Cash has in fact been leaving the sector. U.S. spot bitcoin ETFs lost about $1.28 billion in the week ended Nov. 6 — their worst week since June — and IBIT accounted for roughly $1.21 billion of that, according to Farside Investors data.

Self-custody under pressure

The fears driving the trade are well documented. French authorities have recorded 77 crypto-linked kidnappings, extortion cases and home invasions so far in 2026, more than in all of 2025, the OCCRP reported, citing the country's national organized crime prosecutor. Reuters reported last year that Ledger's co-founder lost a finger after being kidnapped along with his wife.

The United States has seen cases of its own, including a failed Connecticut plot to force a family to hand over bitcoin. Bitcoin security researcher Jameson Lopp maintains a public list of physical attacks on holders stretching back to 2014, and the Coldcard bug disclosed in August put hardware wallets under scrutiny as well.

The shift runs counter to bitcoin's founding promise of holding money without a bank. Holders who convert surrender their private keys in exchange for a brokerage claim, trading the risk of guarding the coins themselves for reliance on BlackRock, its custodian and the market makers in between.

This article first appeared on Bitcoin Magazine and was written by Micah Zimmerman.