‘Another nail in the coffin’ of original crypto spirit: Whales ditch self-custody for ETFs
Wealthy Bitcoin holders are shifting billions into regulated ETFs, like BlackRock's IBIT, due to tax benefits and convenience, abandoning self-custody.Summary
Wealthy Bitcoin holders are increasingly moving substantial assets from self-custody into regulated spot Bitcoin Exchange-Traded Funds (ETFs), marking a significant decline in self-custodied BTC for the first time in over 15 years, according to Uphold's Martin Hiesboeck. This shift signals a departure from the original crypto ethos of "not your keys, not your coins," driven by the convenience, integration with traditional financial advisors, and significant tax advantages offered by ETFs.
BlackRock’s iShares Bitcoin Trust (IBIT) is leading this trend, facilitating over $3 billion in conversions from large holders ("whales"). A key accelerator is a recent U.S. Securities and Exchange Commission (SEC) rule change allowing for “in-kind” creations and redemptions. This mechanism permits authorized participants to exchange Bitcoin directly for ETF shares without triggering a taxable sale, unlike traditional “cash” ETFs where asset sales for redemptions pass capital gains onto shareholders. The in-kind structure makes ETFs more tax-efficient for long-term holders by avoiding the distribution of collective capital gains.
(Source：Cointelegraph)