Key ideas

  • BlackRock's iShares Bitcoin Trust (IBIT) is an instant Bitcoin exchange-traded fund that gives investors the opportunity to invest in Bitcoin without needing to own BTC directly.

  • The fund holds Bitcoin in offline storage through Coinbase Prime and is listed for trading on the NASDAQ stock exchange.

  • IBIT offers liquidity, regulatory oversight, and simplicity for investors, but its performance can be affected by Bitcoin price fluctuations and ongoing management costs.

What is an Instant Bitcoin Exchange-Traded Fund?

An exchange-traded fund (ETF) is an investment vehicle that pools funds from investors to buy and hold a portfolio of assets, such as stocks, bonds, commodities, or digital assets. ETFs trade on public exchanges throughout the day, providing liquidity, transparency, and ease of access. These funds allow investors exposure to various markets without having to manage the underlying assets themselves.

The instant Bitcoin exchange-traded fund applies the same concept to Bitcoin, but instead of holding traditional assets, it tracks the price of Bitcoin and allows investors to participate in its market through regulatory-compliant financial platforms.

There are two main types of Bitcoin exchange-traded funds:

  • Instant exchange-traded funds: Hold actual Bitcoin in custody to reflect its market price.

  • Futures exchange-traded funds: Track the prices of Bitcoin futures traded on regulated trading platforms, instead of directly holding Bitcoin.

Each share of the instant Bitcoin exchange-traded fund represents a portion of the Bitcoin held by the fund, which is stored by a custodian subject to regulatory rules. The share price moves in line with the market value of Bitcoin, providing investors with a familiar and regulatory-compliant method to invest in Bitcoin.

Instant Bitcoin exchange-traded funds received regulatory approval in the United States in January 2024, marking a significant milestone for integrating digital assets into traditional finance. The opportunity for direct investment in Bitcoin, along with regulatory oversight, has drawn increasing interest from individual and institutional investors seeking a simple and compliant way to invest in Bitcoin.

About BlackRock

BlackRock is a global asset management company based in New York, founded in 1988, and offers a wide range of investment products and financial services, including exchange-traded funds, mutual funds, and investment portfolio management solutions. The company works with institutional and individual clients across various markets and is considered one of the key participants in the global investment industry.

BlackRock's iShares Bitcoin Trust

The iShares Bitcoin Trust (IBIT) is an instant Bitcoin exchange-traded fund launched by BlackRock, one of the world's leading asset management companies. The U.S. Securities and Exchange Commission approved the IBIT fund on January 11, 2024, and trading began shortly thereafter on the NASDAQ stock exchange, one of the largest U.S. exchanges. This allowed investors to invest in Bitcoin by buying and selling shares through traditional brokerage accounts.

BlackRock submitted its application to the Securities and Exchange Commission on June 15, 2023, and received approval after seven months. The SEC's decision marked a significant milestone for both the cryptocurrency and traditional finance sectors, as it approved 11 instant Bitcoin exchange-traded funds on the same day.

Since its launch, the IBIT fund has seen rapid growth and strong demand from investors, exceeding $1 billion in assets within the first week of trading, and has since become the largest Bitcoin exchange-traded fund in the world. By October 2025, IBIT's total BTC holdings reached over 800,000 BTC, representing approximately 3.8% of the total supply of Bitcoin.

How IBIT Works

Structure and Management

IBIT uses a creation and redemption system to keep share prices consistent with the actual prices of Bitcoin. When more investors buy IBIT shares, new shares are issued, and the proceeds are used to buy more Bitcoin.

When investors sell their shares, the fund may sell a portion of its Bitcoin holdings to provide liquidity. This process helps ensure that the market price of the exchange-traded fund accurately reflects the underlying value of Bitcoin. The fund charges a management fee of 0.25% annually, which covers operational and administrative costs.

Custody and Security

BlackRock collaborates with Coinbase Custody Trust, also known as Coinbase Prime, to store the fund's Bitcoin. The assets are kept in what is known as cold storage, meaning they are fully offline to reduce the risks of hacking or unauthorized access.

The Bitcoin held by the IBIT fund is stored in separate wallets, away from Coinbase's balances, ensuring clarity of ownership and transparency. Each wallet is secured using multi-signature authorization, requiring multiple approvals for any transfer. Regular cybersecurity audits are also conducted to help maintain the integrity and security of the fund's assets.

Investors who own shares in the IBIT fund do not need to manage any private keys for Bitcoin or store them directly, as the fund's custodians handle all security and redemption operations.

Standard pricing

To accurately track Bitcoin prices, the IBIT fund uses the reference price for Bitcoin set by the CF benchmark on the Chicago Mercantile Exchange. This benchmark calculates the daily average Bitcoin price from several major cryptocurrency trading platforms. This helps prevent temporary price fluctuations or discrepancies on a single trading platform from affecting the overall value of the exchange-traded fund.

Key features

  • Accessibility: The IBIT fund provides investors the opportunity to invest in Bitcoin through traditional brokerage accounts, eliminating the need for wallets or direct holding of cryptocurrencies.

  • Liquidity: As one of the most active Bitcoin exchange-traded funds, the IBIT fund offers deep liquidity and efficient execution prices.

  • Regulatory-compliant infrastructure: IBIT, managed by BlackRock under the oversight of the Securities and Exchange Commission, operates within a transparent and regulatory-compliant framework, and Coinbase serves as the regulatory-compliant custodian.

  • Custody and security: All Bitcoin supporting IBIT is stored in offline custody with Coinbase Custody, and the assets are protected through the use of separate wallets, multi-signature authorization, and regular security audits.

Risks and considerations

While the IBIT fund provides a regulatory-compliant alternative way to invest in Bitcoin, it is crucial to understand the risks involved as well:

  • Market volatility: The price of Bitcoin remains highly volatile, so investors in the exchange-traded fund are exposed to its price movements.

  • Regulatory changes: Future updates to cryptocurrency laws or financial regulations could affect the operation of Bitcoin exchange-traded funds or how they are taxed.

  • Custody and counterparty risks: The Bitcoin held by the IBIT fund is stored by Coinbase Custody, and although the company is regulated and implements strict security measures, no system is completely risk-free.

  • Tax implications: Profits from selling IBIT shares may be subject to capital gains taxes, similar to direct ownership of Bitcoin. The tax treatment depends on the regulations in each country and may vary by jurisdiction.

Expanding global access with IB1T

After its success in the United States, BlackRock expanded its Bitcoin offerings to global markets to meet the growing worldwide demand for regulatory-compliant investment in cryptocurrencies. In March 2025, it launched the iShares Bitcoin ETP (IB1T) across Europe, followed by its listing on the London Stock Exchange in October 2025.

The ETP is effectively backed by Bitcoin and denominated in US dollars, allowing investors in Europe and the UK to invest in Bitcoin within a regulatory-compliant framework through traditional brokerage platforms. This move expands access to Bitcoin for both individual and institutional investors, bridging the gap between traditional finance and the digital asset ecosystem.

Closing thoughts

The iShares Bitcoin Trust (IBIT) from BlackRock represents a link between traditional finance and the world of digital assets. Exchange-traded funds allow investors the opportunity to invest in Bitcoin through familiar brokerage accounts, without the need to manage private keys or digital wallets.

While products like IBIT make investing in Bitcoin more accessible and regulated, they still carry the same risks associated with Bitcoin price fluctuations and market uncertainty. Therefore, before investing, it is important to understand how instant Bitcoin exchange-traded funds work, review the associated fees, and assess how they align with your investment strategy and goals.

Disclaimer: This content is presented to you 'as is' for the purpose of providing general information and educational purposes only, without any representations or warranties of any kind. It should not be construed as financial, legal, or any other specialized advice, nor is it intended to recommend any specific product or service. You should seek specialized advice from qualified advisors. The products mentioned in this article may not be available in your region. If the article is provided by a third party, please note that the opinions expressed are those of that third party and do not necessarily reflect the views of Binance Academy. Please readFull disclaimerfor more details. Digital assets may be subject to price volatility, and the value of your investment may increase or decrease, and you may not get back the amount you invested. You bear sole responsibility for your investment decisions and Binance Academy bears no responsibility for any losses you may incur. This article should not be construed as financial, legal, or any other professional advice. For more information, please refer toTerms of Use and Risk Warning.