Security Threats Push Bitcoin Whales Toward BlackRock's IBIT, Exec Says

BlackRock's digital assets chief said Monday that large bitcoin holders are transferring their self-custodied coins into the iShares Bitcoin Trust (IBIT) at an unprecedented rate, driven by concerns over kidnappings and hacks that have made security their top priority.

Robbie Mitchnick told Barron's that the current level of such conversions is the highest the firm has ever recorded. He described demand for the swaps as overwhelmingly one-directional — upward. When asked about client motivations, Mitchnick identified security and peace of mind as the primary driver.

The transactions are structured as in-kind conversions. A holder delivers bitcoin to the fund via an intermediary and receives newly issued IBIT shares in return, without selling the cryptocurrency for cash first. BlackRock uses Galaxy Digital, Talos and Virtu to execute these trades, and those firms determine the minimum size.

Barron's estimated the volume BlackRock has processed at $3.6 billion, though it noted the actual total may be higher since the firm does not handle every conversion directly. Mitchnick provided a larger figure in August, telling Bloomberg that IBIT had handled over $5 billion in such swaps, up from more than $3 billion in October 2025.

In that same August interview, Mitchnick spelled out the threats explicitly, saying holders see events like kidnappings, ransom demands and custody failures in the outside world, which prompt them to move all or part of their holdings.

He told Barron's that the recent Binance hack did not surprise large holders, noting that most were already well aware of the dangers of keeping assets on exchanges or in hot wallets.

How BlackRock’s swaps became possible

The SEC voted on July 29, 2025, to permit spot bitcoin and ether funds to create and redeem shares in kind, ending the cash-only requirement that had been in place since the funds launched in January 2024.

Access has expanded since then. Barron's reported that BlackRock's minimum has fallen from roughly $30 million to between $1 million and $2 million.

Tax considerations are part of the appeal. Barron's noted that converting appreciated bitcoin into IBIT in kind is generally not treated as a sale that would trigger capital-gains taxes, though Bloomberg warned that avoiding an immediate tax bill depends on the investor's specific situation. Mitchnick also mentioned estate planning, saying it is much simpler to hold the exposure within a private bank.

Once transferred, the coins are held by IBIT's custodian, an affiliate of Coinbase Prime, in what Mitchnick described as an institutional-grade cold-storage setup. As of Nov. 6, the fund held 795,921 BTC, worth approximately $60.4 billion.

Why the flow numbers overstate demand

An in-kind creation adds IBIT shares and is counted in the fund's reported flows, but it does not involve buying bitcoin on the open market. The coins already existed and merely changed form, so headline flow figures exaggerate new cash inflows.

Cash has been moving in the opposite direction. According to Farside Investors, U.S. spot bitcoin ETFs lost roughly $1.28 billion in the week through Nov. 6, their worst weekly performance since June, with IBIT accounting for about $1.21 billion of those outflows.

Self-custody under pressure

The security fears behind the trend are well documented. French authorities have recorded 77 crypto-related kidnappings, extortion cases and home invasions so far in 2026, exceeding the total for all of 2025, according to the OCCRP, which cited the national organized crime prosecutor. Reuters reported last year that Ledger's co-founder lost a finger after being kidnapped along with his wife.

The U.S. has its own incidents, including a failed plot in Connecticut to force a family to hand over bitcoin. Bitcoin security researcher Jameson Lopp maintains a public list of physical attacks on holders dating back to 2014, and the Coldcard bug in August also raised questions about hardware wallet security.

The move away from self-custody runs counter to bitcoin's original promise of holding money without a bank. Holders who convert surrender their private keys for a brokerage claim, swapping the risk of self-custody for dependence on BlackRock, its custodian and the intermediaries in between.