Krista Lynch, Senior Vice President, ETF Capital Markets at Grayscale Investments, said crypto exchange-traded funds are increasingly attracting experienced digital asset holders, not just traditional investors entering the market for the first time.
Speaking at Consensus Miami 2026 on Thursday, Lynch said one of the more unexpected developments has been the interest from “crypto whales” looking to move existing Bitcoin and Ethereum holdings into ETF structures.
She said, “We’ve been surprised that it’s actually kind of crypto whales that are most interested in this use case. So if I have a bunch of Bitcoin or a bunch of Ethereum sitting around, I might not be able to use that for margin collateral. I can’t use that in an estate plan. It’s not in a sort of brokerage account that has those features. And so by being able to inkind it into an ETF, I can access the benefits of the U.S. financial system.”
According to Lynch, these investors are using ETFs less as onboarding tools and more as a way to integrate crypto assets into broader financial portfolios.
ETFs opened a new use case
A major shift came after regulators allowed in-kind creation and redemption mechanisms for crypto ETFs. Earlier versions of spot crypto ETFs operated primarily through cash-based processes after the SEC initially restricted in-kind structures.
Lynch said that changed once regulators became more comfortable with the model, enabling investors to transfer crypto directly into ETF shares rather than liquidating holdings first. The adjustment created new flexibility for investors already holding substantial amounts of digital assets in self-custodied wallets.
Access to trraditional financial features
Lynch explained that many large crypto holders face limitations when assets remain outside traditional brokerage systems. Bitcoin or Ethereum stored in wallets may not easily integrate with margin accounts, estate planning frameworks, or other financial services tied to conventional investment accounts.
By moving assets into ETFs, investors can access those features while maintaining crypto exposure. She described the ETF wrapper as a bridge between crypto-native ownership and the infrastructure of the U.S. financial system, particularly for investors seeking portfolio consolidation.
ETFs expanding beyond retail onboarding
Spot Bitcoin ETFs were initially viewed as products designed to bring mainstream investors into crypto markets without requiring direct wallet management or blockchain interaction.
Lynch said the market has evolved beyond that original narrative. While ETFs still serve investors unfamiliar with self-custody, they are increasingly being used by experienced participants who already hold crypto directly. The shift reflects how ETF infrastructure is adapting to different segments of the market, including institutional and high-net-worth crypto-native investors.
Infrastructure still evolving
Lynch suggested that ETF innovation is still in an early phase, particularly around operational infrastructure and portfolio functionality.
The ability to move crypto holdings into regulated financial products has expanded the appeal of ETFs beyond passive exposure. For some investors, the value now lies in how those assets interact with broader financial systems rather than simple market access alone.
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