Major Bitcoin holders have begun swapping their assets for shares in exchange-traded funds, according to BlackRock
Bloomberg News reported on Tuesday that Bitcoin whales are transferring their wealth from the blockchain to Wall Street's balance sheets.
She added that Bitcoin exchange-traded funds provide a new way for wealthy cryptocurrency holders to bring their coins into traditional financial markets without selling them.
Exchange operations are considered tax-neutral swaps where no money changes hands and no taxable sales occur.
Eric Balchunas, an analyst for the ETF, stated that some Bitcoin whales are creating custom IBIT units and trading their physical Bitcoin for shares of the fund, "to gain a variety of benefits after discovering that TradFi has its advantages."
The return of Bitcoin users to traditional finance
Once Bitcoin is held as an ETF within a brokerage account, it becomes much easier to use it as collateral for loans and include it in estate planning.
It also provides access to higher-level wealth management services and integration with traditional financial advisors and banks.
The moves from BTC to ETFs have been driven by regulatory approval of "in-kind creations," which allow for the "swapping" of digital assets for shares in the ETF without generating a taxable event.