Can You Convert IBIT to Bitcoin? What Shareholders Need to Know

Why Direct Redemption Isn't Possible

The limitation isn't unique to IBIT, and it isn't arbitrary. It comes from how ETFs are built and regulated.

IBIT operates under the authorized participant system used by virtually all ETFs. When demand for IBIT rises, large financial institutions — known as authorized participants — create new shares in large blocks called creation units, typically tens of thousands of shares at a time. When demand falls, those same institutions redeem creation units and remove shares from circulation. Retail investors never interact with this process. When you buy IBIT, you're buying shares from another investor on the open market. When you sell, you're selling to another buyer. Your brokerage never touches the trust's Bitcoin.

When the SEC first approved spot Bitcoin ETFs in January 2024 (filings available on SEC EDGAR), it required a cash-only creation and redemption model. Authorized participants delivered cash to the trust, and the trust itself handled all Bitcoin buying and selling internally. In 2025, the SEC reversed course and allowed in-kind transactions, meaning authorized participants can now deliver or receive actual Bitcoin when creating or redeeming shares. This change improved efficiency and tracking for the fund, but it does not open any redemption path for individual shareholders. Only authorized participants can transact directly with the trust, and they do so in very large institutional blocks.

The practical result for retail investors is unchanged: you live entirely on the secondary market. You buy IBIT from other sellers and sell IBIT to other buyers through your brokerage, at whatever the market price happens to be. Your broker doesn't interact with BlackRock's trust on your behalf. The structure is identical to GLD for gold — you own shares, not the bars. In this case, you own shares, not the coins.

How to Go From IBIT to Bitcoin

If what you really want is Bitcoin, the path is straightforward. Think of it as a controlled exit from the ETF wrapper.

First, calculate your Bitcoin equivalent. Before you sell anything, you should know how much Bitcoin your IBIT position represents. Each IBIT share corresponds to a specific amount of BTC, published daily by the fund. As of early 2026, that figure is approximately 0.000568 BTC per share. If you hold 500 shares: 500 × 0.000568 = 0.284 BTC. The live calculator on this site pulls directly from fund disclosures and gives you the exact number in seconds.

Second, sell your IBIT shares. Place a sell order through your brokerage during market hours. You'll receive U.S. dollars in your account, typically settling on a T+1 basis. This step is no different from selling any other ETF.

Third, buy Bitcoin. Once the cash is available, purchase Bitcoin through a cryptocurrency exchange (Coinbase, Kraken, Gemini, etc.) or through a brokerage that supports both equities and crypto (Fidelity, Robinhood, etc.). Buy the amount of Bitcoin you calculated in the first step, adjusted for any price movement between the sale and purchase.

Fourth, withdraw to self-custody if you choose. If your motivation is direct ownership, this is the final step. Transfer the Bitcoin from the exchange to your personal wallet — a hardware device, a mobile wallet, or a multi-signature setup. This is the step where you move from ETF exposure to actual on-chain ownership, and where “not your keys, not your coins” gets resolved.

One important caveat: selling IBIT is a taxable event. If your shares have appreciated, you'll owe capital gains tax on the profit, just as you would when selling any stock or ETF. That tax cost can materially affect the economics of converting, especially if you've held through a large Bitcoin price increase. It's worth understanding the tax treatment before making the switch.

Why Some Investors Choose to Make the Switch

Investors who ask about converting IBIT to Bitcoin usually aren't confused — they're weighing tradeoffs.

For some, self-custody is the core reason. Holding Bitcoin directly means controlling the private keys and eliminating reliance on the trust structure, the custodian, and the ETF sponsor. That appeals to investors who prioritize sovereignty over convenience.

Others focus on fees. IBIT charges an annual expense ratio of 0.25%, which slowly reduces the Bitcoin backing each share over time. Holding Bitcoin directly in a personal wallet has no ongoing management fee, though it does shift responsibility for security and storage onto the owner.

There's also utility. IBIT shares can't be sent, spent, or used on the Bitcoin network. They're purely a financial instrument. If you want to actually use Bitcoin for payments, transfers, or interaction with the broader ecosystem, you need the real thing.

At the same time, there are good reasons many investors stick with IBIT. The ETF fits neatly into IRAs and other tax-advantaged accounts, integrates with traditional brokerage platforms, removes the operational burden of managing private keys, and simplifies estate planning — passing ETF shares to heirs is legally straightforward, while passing private keys can be complex if instructions are lost. A full comparison of the tradeoffs is in our guide.

See how Bitcoin ETFs compare on fees, custody, and liquidity on our ETF comparison page, or browse the education hub for more guides. Wondering which fund is the best fit? Read our guide to choosing the best Bitcoin ETF.

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