Key Takeaways
BlackRock’s iShares Bitcoin Trust (IBIT) is a spot bitcoin ETF that gives investors exposure to bitcoin’s price without owning BTC directly.
The fund holds bitcoin in cold storage through Coinbase Prime and is listed for trading on the NASDAQ exchange.
IBIT offers liquidity, regulatory oversight, and simplicity for investors, though its performance can be influenced by bitcoin’s price fluctuations and ongoing management costs.
What Is a Spot Bitcoin ETF?
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 stock exchanges throughout the day, offering liquidity, transparency, and accessibility. They allow investors to gain exposure to different markets without having to manage the underlying assets themselves.
A bitcoin spot ETF applies this same concept to bitcoin. Instead of holding traditional assets, it tracks the price of bitcoin and allows investors to participate in its market through regulated financial platforms.
There are two main types of bitcoin ETFs:
Spot ETFs: Hold actual bitcoin in custody to reflect its market price.
Futures ETFs: Track the price of bitcoin futures contracts traded on regulated exchanges, rather than holding bitcoin directly.
Each share of a spot bitcoin ETF represents a portion of bitcoin held by the fund, which is stored by a regulated custodian. The share price moves in line with bitcoin’s market value, offering investors a familiar and regulated way to gain exposure to bitcoin.
Spot bitcoin ETFs received regulatory approval in the United States in January 2024, marking a major milestone for the integration of digital assets into traditional finance. Their direct exposure to bitcoin’s price, combined with regulatory oversight, has attracted growing interest from both retail and institutional investors seeking a simple, compliant way to invest in bitcoin.
Who Is BlackRock?
BlackRock is a global asset management firm headquartered in New York. Founded in 1988, the company provides a broad range of investment products and financial services, including ETFs, mutual funds, and portfolio management solutions. The firm works with both institutional and individual clients across different markets and is regarded as one of the major participants in the global investment industry.
BlackRock’s iShares Bitcoin Trust
The iShares Bitcoin Trust (IBIT) is a spot bitcoin ETF launched by BlackRock, one of the world’s leading asset management firms. Approved by the U.S. Securities and Exchange Commission (SEC) on January 11, 2024, IBIT began trading shortly after on the NASDAQ, a major U.S. stock exchange. This enabled investors to gain exposure to bitcoin’s price movements by buying and selling shares through standard brokerage accounts.
BlackRock had originally filed its application with the SEC on June 15, 2023, and received approval seven months later. The SEC’s decision marked a major milestone for both the crypto and traditional finance sectors, approving 11 spot bitcoin ETFs on the same day.
Since its launch, IBIT has seen rapid growth and strong investor demand. The fund surpassed $1 billion in assets within its first week of trading and has since become the largest bitcoin ETF globally. As of October 2025, IBIT holds more than 800,000 BTC, representing approximately 3.8% of bitcoin’s total supply.
How IBIT Works
Structure and management
IBIT uses a creation and redemption system to keep its share price closely aligned with bitcoin's actual price. When more investors buy IBIT shares, new shares are issued, and the proceeds are used to purchase additional bitcoin.
When investors sell, the fund may sell part of its bitcoin holdings to provide liquidity. This process helps ensure that the ETF’s market price accurately reflects the value of its underlying bitcoin. The fund charges a management fee of 0.25% per year, which covers operational and administrative costs.
Custody and security
BlackRock partners with Coinbase Custody Trust Company, also known as Coinbase Prime, to store the fund's bitcoin. The assets are kept in cold storage, meaning they are held completely offline to minimize the risk of hacking or unauthorized access.
IBIT’s bitcoin is stored in segregated wallets, separate from Coinbase’s own holdings, ensuring clear ownership and transparency. Each wallet is secured with multi-signature authorization, requiring multiple approvals for any transfer. Regular cybersecurity audits are also conducted to help maintain the integrity and safety of the fund’s assets.
Investors who hold IBIT shares do not need to manage any bitcoin private keys or storage directly, as the ETF’s custodian oversees all security and recovery processes.
Benchmark pricing
To track bitcoin’s price accurately, IBIT uses the CME CF Bitcoin Reference Rate (BRR). This benchmark calculates a daily average of bitcoin prices from several major cryptocurrency exchanges. It helps prevent temporary price swings or irregularities on a single exchange from affecting the ETF’s overall value.
Key Features
Accessibility: IBIT gives investors exposure to bitcoin through traditional brokerage accounts, removing the need for wallets or direct crypto custody.
Liquidity: As one of the most actively traded bitcoin ETFs, IBIT offers deep liquidity and efficient price execution.
Regulated infrastructure: Managed by BlackRock under SEC oversight, IBIT operates within a transparent, compliant framework with Coinbase as its regulated custodian.
Custody and security: All bitcoin backing IBIT is stored offline in Coinbase Custody's cold storage. The assets are safeguarded through segregated wallets, multi-signature authorization, and regular security audits.
Risks and Considerations
While IBIT provides an alternative and regulated way to gain bitcoin exposure, it’s important to understand the inherent risks:
Market volatility: Bitcoin remains highly volatile, so ETF investors are exposed to its price movements.
Regulatory changes: Future updates to cryptocurrency laws or financial regulations could affect how bitcoin ETFs operate or are taxed.
Custody and counterparty risk: The bitcoin held by IBIT is stored by Coinbase Custody. Although it’s regulated and has strong security measures, no system is completely free of risk.
Tax implications: Profits from selling IBIT shares may be subject to capital gains tax, similar to direct bitcoin ownership. The exact tax treatment would depend on each country’s regulations and may vary by jurisdiction.
Expanding Global Access With IB1T
Following its success in the United States, BlackRock expanded its bitcoin offerings to international markets to meet rising global demand for regulated crypto exposure. In March 2025, it introduced the iShares Bitcoin ETP (IB1T) across Europe, followed by a London Stock Exchange (LSE) listing in October 2025.
The ETP is physically backed by bitcoin and denominated in U.S. dollars, allowing investors in Europe and the UK to gain regulated exposure to bitcoin through traditional brokerage platforms. This expansion extends bitcoin accessibility to both retail and institutional investors, further bridging the gap between traditional finance and the digital asset ecosystem.
Closing Thoughts
BlackRock’s iShares Bitcoin Trust (IBIT) is connecting traditional finance with the world of digital assets. The ETF allows investors to gain exposure to bitcoin’s price movements through familiar brokerage accounts, without the need to manage private keys or digital wallets.
While products like IBIT make bitcoin investing more accessible and regulated, they still carry the same risks tied to bitcoin’s price volatility and market uncertainty. Before investing, it’s important to understand how spot bitcoin ETFs work, review associated fees, and consider how they fit within your investment strategy and goals.
Further Reading
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