Who Owns the Bitcoin Behind BlackRock's IBIT ETF?

Precedent & Market Context

The boom in tokenization and stablecoin payment volumes has led to increased interest in Bitcoin and other cryptocurrencies. Fintechs are exploring ways to offer yield on stablecoin balances, while EU regulators have banned stablecoin yield across DeFi platforms. The Citrini Research predicts a $157 trillion tokenization opportunity in the DeFi market, but the harder question is who will profit from it.

Main Event

The iShares Bitcoin Trust ETF (IBIT) has a complex structure, with a Delaware trust holding the actual Bitcoin, while Coinbase Custody secures it and BlackRock manages the fund. Shareholders have beneficial interests but cannot withdraw or store the coins personally. The trust owns the Bitcoin, Coinbase Custody secures it, and BlackRock manages everything, while shareholders have a claim on the value of the coins.

Analysis & Market Impact

The structure of ownership doesn't directly affect Bitcoin's price because it doesn't create new demand for the asset. Instead, the price is influenced by the volume of share creations and redemptions in the ETF. When demand for IBIT shares exceeds supply, authorized participants can deliver Bitcoin to the trust in exchange for new shares, effectively taking coins off the market. Conversely, heavy selling of IBIT shares can lead to coins being redeemed and returned to traders.

Implications & Outlook

The arrangement entails some loss of control, as holders depend on all three parties and cannot move the coins themselves. IBIT is ideal for investors who want to capture Bitcoin's price movements in a brokerage or retirement account without managing private keys. In contrast, a personal wallet offers direct ownership, but if you lose the seed phrase—the backup words needed to restore access to a wallet—you risk permanently losing your coins.