BlackRock iShares Bitcoin Trust (IBIT) Spot Bitcoin ETF – In-Depth Analysis (1)
The Birth of IBIT & the SEC Approval Journey
Welcome to the first part of our four-part deep-dive series on BlackRock’s iShares Bitcoin Trust (IBIT) — the world’s fastest-growing Bitcoin ETF.
In this first chapter, we’ll uncover how IBIT came to life, how BlackRock navigated over a decade of SEC rejections, and what this landmark approval means for global investors.
Introduction
The world’s largest asset manager, BlackRock, launched the iShares Bitcoin Trust (IBIT) — a spot Bitcoin ETF — in January 2024, marking a historic turning point for the digital-asset industry.
By combining Bitcoin exposure with the traditional ETF framework, IBIT offers both institutional and retail investors unprecedented ease of access to crypto markets.
In this article, we explore IBIT’s regulatory journey, structure, and impact — from its formation to its SEC approval — along with visualization ideas for future presentations.
1. Formation and Regulatory Process (Including SEC Approval)
Birth of IBIT
In June 2023, BlackRock filed for a spot Bitcoin ETF with the U.S. Securities and Exchange Commission (SEC), reigniting hopes for a product that regulators had rejected for more than a decade.
Since 2018, the SEC had consistently denied such filings on market-manipulation grounds.
But by mid-2023, two critical developments shifted sentiment:
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The entrance of financial giants like BlackRock, bringing institutional credibility; and
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Surveillance-sharing agreements with crypto exchanges such as Coinbase, designed to address manipulation concerns.
At the same time, Grayscale won its lawsuit against the SEC in August 2023, overturning the agency’s earlier refusal to let its Bitcoin Trust convert to an ETF — a pivotal legal moment that increased pressure on regulators.
SEC Approval
On January 10, 2024, after years of hesitation, the SEC announced the approval of a group of spot Bitcoin ETFs.
This decision was a watershed event: BlackRock’s IBIT became one of the first approved ETFs.
SEC Chair Gary Gensler clarified that this exception applied only to single, non-security assets like Bitcoin, and not to other cryptoassets.
Roughly ten spot Bitcoin ETFs began trading in mid-January 2024.
IBIT listed on Nasdaq on January 11 and recorded record volumes within days.
Key Drivers Behind Approval
Two main factors underpinned BlackRock’s success:
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Coinbase Surveillance Sharing: Enabled the SEC to monitor the Bitcoin market for manipulation signals.
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BlackRock’s Reputation and Compliance Track Record: Provided confidence in operational transparency and investor protection.
Post-decision analyses called BlackRock’s move a “turning point”, ending the industry’s ten-year struggle for a U.S. spot ETF.
Regulatory Timeline
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June 2023: Application and preliminary prospectus (Delaware trust established). sec.gov
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July – December 2023: SEC review process; Grayscale court victory (Aug 2023).
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January 2024: SEC approval and rule change enabling Nasdaq listing. federalregister.gov
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January 2024: Launch — IBIT began trading Jan 11 as one of the first physical Bitcoin ETFs in the U.S.
📊 Visualization Suggestion
Create a horizontal timeline chart illustrating IBIT’s journey:
June 2023 (filing) → August 2023 (Grayscale lawsuit win) → January 2024 (SEC approval) → January 2024 (first trading day).
This visual would clearly show how fast regulatory momentum built toward approval.
2. Product Structure (Custody, Benchmark, Trading Venue, Expense Ratio)
Legal Framework
IBIT is organized as a Delaware statutory trust, the same structure used by commodity ETFs such as SPDR Gold Trust, and is not registered under the Investment Company Act of 1940.
Thus, IBIT is not a traditional investment company but a grantor trust whose exchange-listed shares represent direct, fractional ownership of the trust’s Bitcoin holdings.
The sponsor is iShares Delaware Trust Sponsor LLC, a BlackRock subsidiary.
Each share corresponds to an undivided beneficial interest in the trust’s total Bitcoin reserves.
Custody and Security
The trust’s Bitcoins are safeguarded by professional custodians:
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Primary Custodian: Coinbase Custody Trust Company, LLC, responsible for cold-storage key management.
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Backup Custodian: Anchorage Digital Bank N.A., designated for redundancy though all BTC currently reside with Coinbase.
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Administrator and Cash Manager: Bank of New York Mellon.
All private keys are stored in offline, air-gapped cold storage, minimizing cyber-risk.
BlackRock emphasizes its integration with Coinbase Prime for trading and settlement, noting Coinbase’s $170 billion+ institutional custody track record.
Benchmark and Pricing
IBIT tracks the CME CF Bitcoin Reference Rate – New York Variant (BRRNY),
an index aligned to U.S. market hours that consolidates data from major exchanges to reflect a fair USD price.
Its investment goal is to mirror the price performance of Bitcoin, minus fees.
As of 2025, the trust holds only Bitcoin (one line item). blackrock.com
Its shares trade intraday on Nasdaq under the ticker IBIT.
Expense Ratio and Fees
IBIT positions itself as a low-cost ETF, charging a 0.25% annual sponsor fee.
At launch, the fee was temporarily reduced to 0.12% for the first 12 months and the first $5 billion AUM.
Rival Fidelity FBTC initially charged 0%, then 0.25% after July 2024, creating a “fee war” that accelerated ETF adoption.
The average ETF expense ratio across the market is ~0.54%, meaning IBIT operates at less than half the industry average — and far below the 1.5% fee of Grayscale’s converted fund.
Operational Details
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Distributions: None (Bitcoin generates no income). blackrock.com
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Fork Policy: Outlined in the prospectus — priority to preserve shareholder value.
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Creation Units: ≈ 22.7 BTC per basket (~$2.85 million in Oct 2025). blackrock.com
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Trading Efficiency: Price typically within ±0.1% of NAV; 30-day median spread ~0.02%. blackrock.com
These mechanics support arbitrage efficiency and high liquidity — IBIT’s hallmark since launch.
📊 Visualization Suggestions
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Structure Diagram: Show Sponsor → Custodian → Nasdaq → Investors flow.
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Fee Comparison Table: IBIT 0.25% vs GBTC 1.50% vs ETF average 0.54%. reuters.com
To Be Continued → Part 2 Tomorrow
Next episode: Fund Performance and Market Metrics
We’ll analyze IBIT’s explosive growth — from $1 billion to $100 billion AUM — and compare its trading dynamics with Fidelity and Grayscale.