The iShares Bitcoin Trust ETF is not an investment company registered under the Investment Company Act of 1940, and therefore is not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940.
What is a bitcoin ETP?
Oct 23, 2026 Commodity
Introduction
A bitcoin exchange-traded product (ETP) is an investment vehicle that provides exposure to the cryptocurrency by investing directly in bitcoin. Bitcoin ETPs offer the ease of stock trading, low costs, tax efficiency, and liquidity.
One of the ways investors can get exposure to bitcoin is through iShares Bitcoin Trust ETF (IBIT), which provides exposure through traditional brokerage platforms -- the same place you purchase stocks, bonds, and other ETFs/ETPs.
What is bitcoin?
Bitcoin is the world’s most recognized and widely adopted cryptocurrency1—and the first digital asset to gain widespread global adoption. Bitcoin allows for peer-to-peer transactions outside of central intermediaries like banks. This is accomplished through blockchain technology, which acts as a distributed ledger maintained across a global network of computers.
There is no physical form of bitcoin; it is solely a digital currency. Additionally, some people see it as a global monetary alternative.
How does bitcoin work?
Bitcoin is a decentralized digital asset and one of the foremost applications of blockchain technology. The blockchain is a public, digital database of transactions maintained by a distributed network without a centralized authority. Leveraging the blockchain, bitcoin enables peer-to-peer transactions and ensures the fidelity and security of each transaction without the need of central intermediaries, like banks or clearinghouses.
Bitcoin transactions are validated and new bitcoins are created through a process known as "mining," during which computers or "miners" race to solve complex mathematical computations. The winning miner updates the blockchain with the latest verified transactions and earns a predetermined amount of new bitcoin generated by the network.
The bitcoins are then held or traded based on supply and demand, which determine the value or dollar price of bitcoin, similar to other commodities or assets. Bitcoins are stored in crypto wallets, which are also used to send and receive bitcoin. Each wallet contains a private key that allows you to send bitcoin to complete a transaction, and a public key that allows you to receive bitcoin.
How is a bitcoin ETP different from owning bitcoin directly?
Investors can access bitcoin either directly through digital wallets and crypto exchanges or indirectly through exchange-traded products.
Direct ownership requires managing wallets, private keys and crypto exchange accounts, which can be operationally challenging for some investors.
Bitcoin ETPs allow investors to gain exposure through traditional brokerage accounts, alleviating some of the challenges of investing directly in bitcoin.
What are the potential benefits of bitcoin ETPs?
Bitcoin ETPs provide a convenient way to gain exposure to bitcoin through a traditional brokerage account, while helping simplify some of the operational, custody and tax complexities associated with holding bitcoin directly.
With the iShares Bitcoin Trust ETF (IBIT), investors own shares of the ETP rather than holding bitcoin directly. The underlying bitcoin is held by the ETP’s custodian, Coinbase, removing the need for investors to manage their own wallets or private keys. This provides investors access to an institutional-grade custody and security model through a familiar investment vehicle.
Bitcoin ETPs can also make it easier to integrate bitcoin exposure into existing portfolios, including through certain tax-advantaged accounts, while providing standard tax reporting.
What are the risks of investing in a bitcoin ETP?
Bitcoin is a highly volatile asset and may not be suitable for certain investors. At large concentrations, bitcoin’s volatility can have a large impact on overall portfolio risk.
To learn more, read our latest research: Re-Underwriting Bitcoin.
How can bitcoin fit in a portfolio?
We recommend you consult with a financial professional to determine if getting exposure to bitcoin aligns with your personal investment goals. There are several factors to consider. Bitcoin has had periods of significant outperformance relative to major asset classes since its inception, but it has come with significant volatility.
Investors with a higher risk tolerance may be inclined to allocate more of their portfolio to bitcoin exposure. Every investor’s situation and goals are unique.
Frequently asked questions
Bitcoin is a global, decentralized digital asset with a fixed supply. Investors can purchase and hold bitcoin directly, but doing so requires them to navigate considerations such as where and how to custody their assets.
Bitcoin ETPs provide exposure to bitcoin through a familiar investment vehicle, without requiring investors to hold the asset directly. Investors can buy and sell ETP shares through traditional brokerage accounts, including certain tax-advantaged accounts, while custody of the underlying bitcoin is handled by the ETP’s custodian. This can help simplify some of the operational, custody and tax complexities associated with direct bitcoin ownership.
Investing in a bitcoin ETP still involves risk, including possible loss of principal.
Yes. Bitcoin ETPs such as the iShares Bitcoin Trust ETF (IBIT) hold bitcoin directly, allowing investors to gain exposure to the price of bitcoin without having to buy and custody bitcoin themselves.
Yes. Bitcoin ETPs are generally accessible through traditional brokerage platforms, much like stocks bonds, and other ETFs/ETPs.
Bitcoin is a highly volatile asset and can experience significant price swings. Because spot bitcoin ETPs provide exposure to the price of bitcoin, their value can also fluctuate significantly.
Investing in a spot bitcoin ETP involves risk, including possible loss of principal, and may not be suitable for certain investors.
In the U.S., bitcoin is treated as property for federal tax purposes. Selling or otherwise disposing of bitcoin may result in a capital gain or loss that must be reported to the IRS.2 Investors should consult a tax professional regarding their individual circumstances.
ETP is the umbrella term for investment vehicles that are listed on exchanges and can be traded throughout the trading day, like stocks.
ETFs are the most common form of ETPs and can invest in a basket of securities, such as stocks, bonds, or other asset classes. Other examples of ETPs include exchange-traded-notes (ETNs), which are a type of debt security issued by financial institutions.
The biggest difference between ETFs and ETPs is how they’re regulated. All ETPs are regulated under the Securities Act of 1933 and Securities Exchange Act of 1934, but different ETPs may be subject to different regulatory requirements and oversight.
Digital asset ETPs such as IBIT and the iShares Bitcoin Premium Income ETF (BITA) are not investment companies registered under the Investment Company Act of 1940, and therefore not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940.
