Introducing BITA – the iShares Bitcoin Premium Income ETF

Yes! BITA gets its long bitcoin exposure by owning spot bitcoin directly and by holding IBIT, the world’s largest and most liquid spot bitcoin ETP.⁵

If your goal is to get one-for-one exposure to bitcoin, you can purchase it directly or use a bitcoin ETP, like IBIT. If you want bitcoin exposure but are uncomfortable with its full risk profile or you seek income on your investment, BITA seeks to provide exposure to most of bitcoin’s upside while offering the potential for premium income.

BITA seeks to generate income by writing call options on IBIT. BITA intends to make monthly distributions based on the option premiums collected.

A covered call strategy involves holding an asset and selling call options on it to generate premium income. Within ETPs, the premium income can be distributed out to investors on a regular cadence.

A covered call exchanges a portion of the asset’s upside participation for upfront premium income payments. This income may help to increase returns in down, flat, or moderately positive markets, while accepting that it will partially dilute returns if the asset moves sharply higher.

Options do not gain or lose value in a one-for-one relationship with the underlying asset. An option buyer's maximum loss is limited to the premium paid for the option, while the potential value of the option can increase significantly if the underlying asset experiences a large price move. Because larger future price swings increase the chance that an option becomes valuable, options on volatile assets are more expensive and typically generate higher premiums for the seller, all else equal. This is sometimes described as a volatility-driven income approach, where the strategy seeks to monetize market volatility through options-related exposure.

As a result, BITA’s income may fall (rise) if bitcoin’s price volatility declines (rises).

No. Investors in BITA are expected to receive a Schedule K-1 instead of Form 1099. This is due to the partnership structure, which we believe results in a materially more tax-efficient outcome for investors despite requiring a different tax reporting process.

BITA leverages a differentiated partnership structure that we believe to be a more tax-efficient implementation for this strategy compared to an ETF registered under Investment Company Act of 1940 (“1940 Act ETF”). This does, however, require a modestly different tax reporting process. The partnership enables BITA to hold spot bitcoin (and IBIT) directly for tax-efficient growth while selling options on IBIT that benefit from lower 60/40 blended capital gains taxation as Section 1256 contracts. This physical implementation enables the spot bitcoin in the partnership to compound on a tax deferred basis until the investor decides to exit. Partnerships also do not require year-end capital gain distributions, and capital losses can be passed through and used to offset other investment gains rather than being stuck as a tax loss carryforward inside of the ETF.

K-1s are anticipated to be available in March.

Retirement accounts generally are not subject to tax or tax return filing requirements on income generated by a partnership investment unless the Schedule K-1 reports "unrelated business taxable income" — also known as UBTI. Many custodians monitor UBTI and manage any necessary tax filings. Investors interested in holding BITA through a retirement account are encouraged to reach out to their custodian or broker for information on what support they offer. See the “Taxation of U.S. Tax-Exempt Shareholders” in the prospectus for more details.