Here is what he said about that part.

It's: (a) get creation order (b) borrow cash in form of trade credits (c) buy bitcoin (d) exchange cash for btc (e) btc settles into trading balance (offchain).

In a regular end-of-day sweep process, the bitcoin that was acquired in the step above gets transferred from the trading account to the "Vault Balance."

^^ this transaction is on-chain ^^ remember: transactions from the Prime entity to the Custody entity are onchain.

Once the AP that started the process delivers cash to the ETF (which I believe happens on T+1 but we'd need to ask Blackrock to be sure, could be T2) IBIT takes the cash & repays the loan to Coinbase (cash in the form of trade credits) and that leg of the txn is complete.