How Spot Bitcoin ETFs Work: Custody and Creations

A spot bitcoin ETF share is a fractional beneficial interest in a trust whose assets are bitcoin and a little cash, and the trust holds the bitcoin through a custodian. The iShares Bitcoin Trust (IBIT) reported 734,261 BTC at June 30, 2026, against 1,296,040,000 shares outstanding. That works out to about 0.000567 BTC, or roughly 56,700 satoshis, behind each share, and the figure shrinks slowly because the 0.25 percent sponsor fee is paid in bitcoin.

What is behind one share: the arithmetic from the filings

The trust's quarterly filing lists its investment in a single line: bitcoin, with a quantity, a cost and a fair value. Dividing quantity by shares gives the coins behind each share.

Item	Dec 31, 2025	Jun 30, 2026
Bitcoin held	770,792 BTC	734,261 BTC
Fair value of the bitcoin	$67,415,764,355	$43,395,920,710
Cost of the bitcoin	$64,696,243,884	$61,003,144,500
Net assets	$67,401,155,244	$43,386,012,125
Shares outstanding	1,358,680,000	1,296,040,000
NAV per share	$49.61	$33.48
Bitcoin per share (BTC held divided by shares)	0.00056731	0.00056654
Implied bitcoin price (fair value divided by BTC held)	about $87,460	about $59,100

Source: iShares Bitcoin Trust Form 10-Q for June 30, 2026 (statements of assets and liabilities and schedules of investments). The last two rows are our arithmetic from the filing's own numbers.

Four readings come out of the table.

1.The trust is almost entirely bitcoin. Total assets of $43.446 billion at June 30, 2026 included $43.396 billion of bitcoin. The filing says the trust's assets consist solely of bitcoin and cash.

2.The coins per share drifted down by about 0.14 percent in six months. From 0.00056731 to 0.00056654 BTC. That is close to what a 0.25 percent annual fee would produce over half a year, roughly 0.12 percent, and the filing states that the sponsor's fee accrues daily and is paid by selling bitcoin. The gap between 0.12 and 0.14 was not investigated.

3.Net assets fell by far more than the price alone would explain. Bitcoin's value fell about 32 percent in the table's two implied prices, while net assets fell about 36 percent, because shares were also redeemed: 62.6 million fewer shares outstanding. That is how the structure works. When investors sell more shares than they buy, authorized participants redeem baskets and the trust releases bitcoin.

4.The trust is large against total supply. 734,261 BTC is about 3.7 percent of the 20.05 million bitcoin in circulation on June 30, 2026, using Coin Metrics' supply figure, down from about 3.9 percent six months earlier.

Who touches the coins: the parties in the filing

A single share trade involves few parties. The creation and storage of the underlying bitcoin involves many. The roles below come from the 10-K and 10-Q; names are as of the dates of those reports.

Role	Who	What it does
Sponsor	iShares Delaware Trust Sponsor LLC	Creates and administers the trust; receives the 0.25% fee and pays most of the trust's expenses
Trustee	BlackRock Fund Advisors	Day-to-day administration; appoints the custodians
Delaware trustee	Wilmington Trust, National Association	Statutory trustee for the Delaware trust
Bitcoin custodian	Coinbase Custody Trust Company, LLC	Holds the trust's bitcoin and its private keys
Additional bitcoin custodian	Anchorage Digital Bank N.A.	Available custodian; the sponsor said it had no plans to move any bitcoin there
Prime execution agent	Coinbase, Inc., an affiliate of the bitcoin custodian	Executes bitcoin purchases and sales; holds a temporary trading balance
Trade credit lender	Coinbase Credit, Inc.	Provides short-term trade credit, secured by a lien on the vault balance
Cash custodian and administrator	The Bank of New York Mellon	Holds cash and administers the trust
Authorized participants	ABN AMRO Clearing USA, BMO Capital Markets, BofA Securities, Citadel Securities, Citigroup Global Markets, Goldman Sachs, Jane Street Capital, Jefferies, J.P. Morgan Securities, Macquarie Capital (USA), UBS Securities, Marex Capital Markets, Virtu Americas (13 as of the 10-K)	The only parties that create and redeem baskets
Bitcoin trading counterparties	Cumberland DRW, Flow Traders, JSCT (a Jane Street affiliate), Virtu Financial Singapore (a Virtu affiliate), Galaxy Digital Trading Cayman (as of the 10-K)	Trade bitcoin with the trust for cash creations and redemptions
Index administrator	CF Benchmarks Ltd.	Calculates the CME CF Bitcoin Reference Rate - New York Variant used for NAV

The concentration is visible in the table. The custodian, the prime execution agent and the trade credit lender are all Coinbase entities. The filing says the prime execution agent is an affiliate of the bitcoin custodian. That is a disclosed structural fact. It does not allege a problem, and each entity is separately regulated, but it is the sort of detail a holder weighs.

Creation and redemption: how shares and bitcoin trade places

Shares are not created by buying them on the exchange. The trust issues and redeems shares only in blocks of 40,000 shares, called baskets, and only with authorized participants, which are registered broker-dealers that have signed an agreement with the sponsor. Everyone else buys and sells existing shares on Nasdaq under the ticker IBIT. The basket mechanism is what ties the share price to the value of the bitcoin.

Creation, step by step:

1.An authorized participant (AP) decides to create one or more baskets, typically because demand for shares has pushed the market price above the bitcoin the shares represent.

2.The AP delivers either cash or bitcoin to the trust, based on the quantity of bitcoin attributable to each share, net of accrued but unpaid fees.

3.In a cash creation, the trust converts the cash to bitcoin by trading with a bitcoin trading counterparty or through the prime execution agent.

4.In an in-kind creation, the AP sends bitcoin directly. The 10-K says the bitcoin is first credited to the trust's trading balance with the prime execution agent and then swept to the vault balance with the custodian at end of day.

5.The cash custodian delivers the new baskets to the AP through the Depository Trust Company, and the AP sells shares to the market.

Redemption is the reverse: the AP returns baskets, and the trust pays out the corresponding bitcoin or the cash proceeds of selling it.

What changed in July 2025. The 10-Q records that on July 29, 2025 the SEC issued 19b-4 orders permitting in-kind creations and redemptions by authorized participants, and on July 31, 2025 the amended registration statement was declared effective. Until then, the creation and redemption of shares was in cash. The in-kind route removes a trade from the process, because bitcoin moves directly and the trust does not need to buy or sell it. The financial statements show the use: the 10-K reports about $845 million of bitcoin paid in-kind for redeemed shares in 2025 and about $5.76 billion of bitcoin received in-kind for shares issued over the same period.

A worked example: one basket

Using the June 30, 2026 numbers, with 0.00056654 BTC attributable to each share and an NAV of $33.48:

	Cash creation	In-kind creation
Shares in one basket	40,000	40,000
Bitcoin attributable to the basket	about 22.66 BTC	about 22.66 BTC
Value of the basket at NAV	about $1,339,000	about $1,339,000
What the AP delivers	about $1.34 million in cash	about 22.66 BTC
What the trust does with it	Buys about 22.66 BTC from a trading counterparty or via the prime execution agent	Receives the bitcoin; no purchase needed
What the AP receives	40,000 shares through DTC	40,000 shares through DTC

The AP's economics come from the gap between the share price in the market and the value of the bitcoin it must deliver, which is the topic of our guide to premiums and discounts. Because baskets are large, retail investors never interact with the creation process, but they benefit when the process keeps the market price close to NAV.

Custody: where the bitcoin actually sits

The filing distinguishes two places the trust's bitcoin can be.

The vault balance. The bitcoin custodian keeps the trust's bitcoin in segregated accounts. The 10-K says trust assets in the vault balance are held in segregated wallets, are "not commingled" with the custodian's or its affiliates' assets or with those of other customers, and sit at Bitcoin blockchain addresses where only the trust's assets are held. The custodian keeps all private keys for the vault balance in cold storage, defined in the filing as keys generated and stored offline on devices not connected to the internet, in facilities in the United States and Europe.

The trading balance. For limited purposes, such as creations and redemptions and selling bitcoin to pay the sponsor's fee, bitcoin and cash can be held temporarily with the prime execution agent. The filing says these holdings "represent an omnibus claim on the Prime Execution Agent's bitcoin (and cash) held on behalf of clients," held across omnibus hot wallets, omnibus cold wallets or accounts on trading venues.

Two further facts shape the risk.

1.A lien on the vault balance. The 10-K states that the vault balance is subject to a lien to secure outstanding trade credits owed to the trade credit lender on a short-term basis under a trade financing agreement. The same passage says neither the bitcoin custodian nor any other Coinbase entity is permitted to withdraw the bitcoin from the vault balance, or loan, hypothecate, pledge or otherwise encumber it, without the trust's consent.

2.Insurance is shared. The filing says the parent company maintains a commercial crime insurance policy covering losses of client assets, and that it is shared among all of Coinbase's customers, is not specific to the trust, and may not be sufficient to protect the trust from all losses. For the additional custodian, the filing says its parent, Anchor Labs, maintains crime insurance with a minimum limit of $100 million.

The premium and discount mechanics that follow from the basket process are in our premium and discount guide, and the daily money moving through these funds is tracked in the ETF flows explainer. The rest of our fund pages are in the ETFs and institutional products topic hub.

This is the real answer to the question "does IBIT hold real bitcoin?" The filings say yes, and give the quantity. The details that matter beyond that are how the coins are stored, which entities can reach them, and how much of the arrangement runs through one corporate group.

How to verify the holding yourself

1.Search the fund's name on the SEC's EDGAR system and open its latest Form 10-Q or 10-K.

2.Find the "Schedule of Investments." It lists the bitcoin quantity, its cost and its fair value. For IBIT on June 30, 2026 the line reads 734,261 bitcoin, cost $61,003,144,500 and fair value $43,395,920,710.

3.Divide fair value by quantity to get the price the trust used, and divide quantity by shares outstanding to get bitcoin per share.

4.For the structured data, the SEC's XBRL company-facts interface exposes the same figures by tag.

The same exercise works for any spot bitcoin fund that files under the same rules, and it takes minutes.

How the other large funds are built: custody and basket size, from their own annual reports

IBIT is one design. Reading the fiscal 2025 annual reports (Form 10-K, filed February 25 to March 12, 2026) of the six next-largest US spot bitcoin funds shows how much the structure varies and how much it does not. Net assets are as of December 31, 2025; IBIT's come from its 10-Q comparative column.

Fund	Bitcoin custodian named in the filing	Basket size	Net assets, Dec 31, 2025
iShares Bitcoin Trust (IBIT)	Coinbase Custody Trust Company, with Anchorage Digital Bank as an available additional custodian	40,000 shares	$67.40 billion
Fidelity Wise Origin Bitcoin Fund (FBTC)	Fidelity Digital Assets, N.A., which the filing describes as an affiliate of the Sponsor	25,000 shares	$17.64 billion
Grayscale Bitcoin Trust (GBTC)	Coinbase Custody Trust Company, with Anchorage Digital Bank as an available alternative custodian	10,000 shares	$14.50 billion
Bitwise Bitcoin ETF (BITB)	Coinbase Custody Trust Company	10,000 shares	$3.37 billion
Ark 21Shares Bitcoin ETF (ARKB)	Four custodians: Coinbase Custody Trust Company, BitGo Bank & Trust, Anchorage Digital Bank and BitGo New York Trust Company	5,000 shares	$3.31 billion
VanEck Bitcoin ETF (HODL)	Gemini Trust Company, with Coinbase Custody Trust Company as additional custodian	25,000 shares	$1.38 billion
Invesco Galaxy Bitcoin ETF (BTCO)	Coinbase Custody Trust Company	5,000 shares	$0.54 billion

Sources: each trust's Form 10-K for the year ended December 31, 2025 on SEC EDGAR, and IBIT's Form 10-Q for June 30, 2026. Names are as the filings give them on their dates and can change.

Three things stand out.

Custody is concentrated. Coinbase Custody Trust Company is the sole or primary bitcoin custodian named for IBIT, GBTC, BITB and BTCO, and one of four for ARKB and the additional custodian for HODL. Only FBTC's filing names no Coinbase entity. The four funds where it is the sole or primary custodian held $85.8 billion of the seven funds' combined $108.1 billion, about 79 percent. This is a reading of disclosed structure and says nothing about the quality of any custodian.

One sponsor keeps custody in the family. FBTC's custodian is an affiliate of its sponsor, a different arrangement from the others, where the sponsor and the custodian are unrelated firms. The filing's exhibit list also includes a BitGo custodial services agreement incorporated from a Form 8-K filed February 5, 2026. The text read for this page describes Fidelity Digital Assets as the custodian that holds all of the trust's bitcoin, and whether the BitGo agreement changes that was not investigated.

Basket sizes vary by a factor of eight. The smallest creation unit is 5,000 shares and the largest 40,000. A basket's dollar value therefore ranges widely: at IBIT's June 30, 2026 net asset value, one 40,000-share basket was about $1.34 million, as the worked example above shows. The basket size matters only to authorized participants, who are the sole creators and redeemers, but it shapes how small a flow can move the fund's holdings.

Fund-by-fund fees, flows and premiums are covered in our spot bitcoin ETFs compared guide. The comparison here is limited to what each annual report states about custody and structure.

What a shareholder can and cannot claim

Question	Answer from the filings
What do I own?	Shares representing "fractional undivided beneficial interests" in the trust's net assets, which consist primarily of bitcoin held by a custodian
Can I take delivery of bitcoin?	Not directly. Only authorized participants can redeem baskets for bitcoin, and only in baskets of 40,000 shares
Do I control a private key?	No. The custodian keeps the keys
Do I get forks and airdrops?	The 10-K says shareholders "will not receive the benefits of any Incidental Rights and any IR Digital Asset, including any forked or airdropped assets"
What do I pay?	A sponsor fee of 0.25% of net asset value, accrued daily; the sponsor assumes most other expenses, with the trust bearing extraordinary costs and ordinary legal costs above $500,000 a year
How is the trust taxed?	As a grantor trust for US federal income tax purposes, with gains and losses passed through to holders
How is NAV set?	Each business day after 4:00 p.m. Eastern, from the CME CF Bitcoin Reference Rate - New York Variant
What if bitcoin falls?	The filing's risk factor states the shares "could lose all or substantially all of their value" and records a decline of more than 50 percent from about $126,000 in October 2025 to below $60,000 in June 2026

On tax, the pass-through treatment is a statement in the fund's own filing, not tax advice. How your holdings are taxed depends on your country and account; our Canadian TFSA and RRSP guide covers one case where the fund wrapper decides eligibility.

What the structure does and does not protect against

It removes key management from the holder. You cannot lose a seed phrase or send coins to a wrong address. That is real, and it is why many people choose the wrapper. The cost is that you rely on the sponsor, trustee and custodians to do their jobs.

It does not remove price risk. The filing says as much, quoting an average annualized one-year trailing volatility of 64.02 percent over the past ten years.

It does not remove counterparty risk. The risk factors list failure of the custodian, the prime execution agent, an authorized participant or a trading counterparty as events that could harm the trust, and describe the need to appoint a replacement if one fails.

It does not guarantee tight pricing at all times. The market price can diverge from NAV, as discussed in the premium and discount guide.

It is not the same as owning coins. If you want the keys, a different set of steps applies, covered in our guide to moving coins to self-custody, and our comparison of crypto stocks, funds and direct ownership sets out the trade-offs without a verdict.

Reconciling the filing: where did the bitcoin go?

The two balance sheets can be reconciled with simple arithmetic, which is a good test of whether the structure works as described. Shares outstanding fell by 62,640,000 between December 31, 2025 and June 30, 2026 (1,358,680,000 down to 1,296,040,000). At about 0.000567 BTC per share, that many redeemed shares account for roughly 35,500 BTC. The trust's holdings actually fell by 36,531 BTC (770,792 down to 734,261). The difference, about 1,000 BTC, is close to what the sponsor fee would take over half a year: 0.25 percent a year on roughly 750,000 BTC for six months is about 940 BTC. The match is not exact, because share counts and holdings moved day by day, but the order of magnitude agrees, which is what the description of the structure predicts.

What the fee costs in dollars

The fee accrues daily at 0.25 percent of net asset value. Applying that to the June 30, 2026 net assets of $43.386 billion gives about $108 million a year, or about $9.0 million a month. The balance sheet also shows a sponsor's fee payable of $9,954,352; the filing does not say how many days of accrual that covers, so this page does not use it as a cross-check. For an investor, the same rate means $25 a year on a $10,000 holding, taken in bitcoin and not billed. The comparison to holding coins directly is then one between a 0.25 percent fee and the costs of your own custody, which are different in kind and are not captured by a single number.

Which fund to hold is not a question this page answers. The comparison of crypto stocks, funds and direct bitcoin lays out the trade-offs of each wrapper without a verdict, and is the next read if you are still choosing a route.

Frequently Asked Questions

Does IBIT hold real bitcoin?

Yes, according to its SEC filings. Its Form 10-Q for June 30, 2026 lists 734,261 bitcoin with a fair value of $43,395,920,710, and the filing says the trust's assets consist solely of bitcoin and cash. The custodian keeps the private keys in cold storage.

How does a bitcoin ETF work?

A trust holds bitcoin and issues shares that trade on an exchange. Authorized participants create or redeem baskets of shares by delivering cash or bitcoin to the trust, which keeps the share price close to the value of the bitcoin. Investors buy and sell shares like any stock.

Can I redeem my bitcoin ETF shares for actual bitcoin?

Not directly. IBIT issues and redeems shares only in baskets of 40,000 and only with authorized participants. A retail investor sells the shares in the market for cash instead.

Which custodians hold the bitcoin for the big spot funds?

Coinbase Custody Trust Company is the sole or primary custodian named for IBIT, GBTC, BITB and BTCO, one of four for ARKB and the additional custodian for HODL. FBTC uses Fidelity Digital Assets, an affiliate of its sponsor. These are the arrangements stated in each fund's fiscal 2025 annual report.

Why does the number of bitcoin per share go down?

The sponsor's fee of 0.25 percent a year accrues daily and is paid by selling bitcoin from the trust. Each share's claim on the trust's bitcoin falls slightly each day. From December 31, 2025 to June 30, 2026 it fell about 0.14 percent.