Zerocap unveils Bitcoin-to-ETF swap & credit tools

Zerocap has launched a service that lets institutional and wholesale investors swap physical Bitcoin into shares of BlackRock's iShares Bitcoin Trust without selling the cryptocurrency first.

The Melbourne-based digital asset firm says the swap moves investors from direct Bitcoin holdings into a US-listed exchange-traded fund structure while maintaining exposure to Bitcoin's price. It targets investors who want to hold Bitcoin through a regulated vehicle in standard brokerage accounts.

Institutional investors have increased allocations to Bitcoin ETFs over the past year as large asset managers and securities platforms expand access. That has sharpened focus on how investors move between self-custody, exchange custody, and ETF holdings without taking additional market risk during the transition.

Zerocap's service exchanges Bitcoin for IBIT shares in a single process, instead of selling Bitcoin, holding cash, then buying ETF shares. The usual approach can leave investors exposed to price moves during execution windows and create "cash drag" if funds sit uninvested between legs of the trade.

BlackRock's iShares Bitcoin Trust is now the largest spot Bitcoin ETF by assets under management. Zerocap cited figures showing IBIT grew from US$111.7 million to a peak of US$73 billion in assets over the period it measured.

Collateral angle

A key selling point is the ability to hold Bitcoin exposure in a form banks and brokers are more likely to recognise in lending and custody processes. Many traditional wealth platforms do not accept physical cryptocurrency as collateral, citing operational and compliance hurdles around wallets, keys, and on-chain transfers.

IBIT shares, like other listed ETFs, sit within conventional custody and settlement arrangements and can be held through mainstream brokerage accounts. That structure can also make it easier for lenders to take and manage security over the position.

Zerocap says this bridges a gap for investors who built large native Bitcoin positions but now want access to credit and other traditional portfolio tools. It also positions ETFs as a middle ground for wealth managers seeking crypto-linked exposure without administering direct holdings.

Financing products

Alongside the swap, Zerocap has introduced financing options backed by IBIT shares, including Lombard loans and collar strategies over the ETF position.

Lombard loans are borrowings secured against invested assets. Zerocap says these loans typically offer loan-to-value ratios of 50% to 60%, with interest rates around 10%.

Collar financing combines options that set a floor and a cap around an asset's price, typically using a put and a call. Zerocap says the approach "enables attractive risk symmetry through balanced put and call strikes, often supporting loans up to the put strike at competitive interest rates".

The suite reflects a broader trend in crypto markets toward credit products that mirror securities-backed lending. It also comes as investors look for ways to manage volatility while retaining long-term exposure, particularly as ETFs make it easier to hold positions within portfolio mandates that require regulated instruments.

Custody and risk

For large holders, the decision to move away from direct Bitcoin custody often comes down to operational risk and governance. Self-custody requires secure management of private keys and clear internal controls, while holding assets on exchanges adds counterparty exposure.

ETF ownership changes those risks: investors hold shares while the fund structure manages custody and administration. That can fit better with institutional compliance processes, although investors still face Bitcoin market risk through the ETF's price movements.

Mark Hiriart, Zerocap's head of sales, said demand is growing for Bitcoin exposure within familiar market structures.

"We're seeing strong demand from institutions that still want Bitcoin exposure, but within a structure that fits traditional financial and compliance frameworks. Zerocap's BTC-IBIT service removes the operational and market friction from that transition, allowing investors to stay invested while gaining the benefits of a regulated ETF," Hiriart said.

The BTC-to-IBIT swap service is available now for institutional and wholesale investors.