With creation an entity, in this case institutional investor can aquire the Bitcoin ETF shares by transferring the custody of the equivillent in actual Bitcoin to the ETF issuer. With redemption, this will work in reverse where the custody of said actuall bitcoin can be given back to the AP in return for the ETF shares.

This is useful for a whole plethora of reasons but primarily it cost effectiveness due to the defferance of capital gains tax as it does not trigger a taxable event.