Individual retirement accounts (IRAs) focused on crypto are still considered alternative investments, but their very existence says something. Traditionally, the IRA is a long-term account used to buy and hold securities. Many people rely on their IRAs almost completely after retirement — it’s not something to be used for risky speculation.
But it seems mainstream investors are beginning to think of crypto as a long-term investment even though much of the industry remains unregulated. Let’s take a look at the concept of the crypto IRA to see how that can work.
How Crypto IRAs Work
A crypto IRA falls under the umbrella of self-directed IRAs. Crypto’s volatility and looser regulatory structure likely scare investment custodians away from accepting responsibility for consistent returns.
Most financial institutions brand their crypto IRAs with the bitcoin name because of bitcoin’s popularity. There are IRA investment opportunities available in other major coins including ether, litecoin, ripple and bitcoin cash. They usually have higher fees associated with them than traditional IRAs, and there are more fees to consider.
The average crypto IRA will have a holding fee, minimum monthly account fee, establishment fee and fees for purchasing assets and fund transfers. Traditional IRA accounts generally do not have any establishment or monthly maintenance fees.
Within an IRA designation, cryptocurrency accounts are automatically subjected to regulations they would otherwise avoid. IRA contribution limits apply to crypto IRAs as well, for example. Investors are also required to purchase the cryptocurrencies in an IRA from a designated firm. These firms use their monopoly to charge fees for their involvement.
Additionally, crypto IRAs can only be traded during standard market hours. The crypto market is 24/7/365, so the value of an IRA can change significantly over a weekend while leaving the investor with no recourse. Crypto within an IRA account is subject to capital gains taxes as well.
Best Cryptocurrency IRAs
Now that you know the general rules and limitations of the cryptocurrency IRA, let’s take a look at the best of the breed:
1. Best for Competitive Rates: iTrustCapital
iTrustCapital is the leading digital asset IRA trading platform that allows you to directly buy and trade cryptocurrencies and physical gold in real-time through their retirement accounts.
They have completely transparent pricing with crypto being a 1% trade fee and gold $50 over spot. There is also a $29.95 monthly account fee which provides the following:
- IRA setup at iTrust Custodial Services
- Facilitation of any transfers to your IRA
- IRS and tax reports by iTrust Custodial Services
- Unlimited storage with institutional custody partners
- Platform support and maintenance
2. Best for Full Service: Bitcoin IRA
Bitcoin IRA is a full-service solution that allows you to invest in bitcoin, ethereum, ripple, litecoin, bitcoin cash and ethereum classic with your IRA. The firm works to make the complex process of crypto investing simpler and safer.
Your digital assets are stored and insured for up to $100 million with BitGo Trust, which is powered by BitGo Inc.’s technology. BitGo Inc. is the world’s largest processor of on-chain bitcoin transactions, processing 20% of all global Bitcoin transactions and holding over $2 billion in assets in wallet.
Whether you need help with a rollover, traditional or Roth IRA—it only takes a few minutes to open an account with Bitcoin IRA.
3. Best for Security: BitIRA
Most crypto IRA companies take no responsibility for the security of your crypto. BitIRA turns this trend on its head and offers end-to-end insurance for your account.
You also get true cold storage for your crypto — it’s kept on a hard drive in a vault that is physically guarded around the clock. You get this protection along with praiseworthy customer service that will make you feel comfortable even if you have never invested in crypto before.
The selection of cryptocurrencies currently available with BitIRA includes bitcoin, bitcoin cash, litecoin, ethereum classic, ether and ripple.
If you want to trade crypto while holding your IRA, you need a good trading platform. Here are a few of the best to consider:
Growing Old on Crypto
If you are looking for a way to inject growth potential into a long-term portfolio, holding a crypto IRA is a viable option. Crypto may also be a good last-minute hedge against inflation or low-interest rates for older people who are about to retire. Although the industry is still volatile, financial professionals now have enough data to make qualified investment assessments.
It may be a bit premature to put everything into crypto even under the tax haven of the IRA. However, it may also be time to take a serious look at how this market can make your golden years even more fruitful.
Frequently Asked Questions
Can you put bitcoin in an IRA?
Absolutely. Through a crypto IRA company, you can hold Bitcoin and many other major cryptocurrencies in an IRA account. This account is subject to the same rules and has the same advantages of an IRA that holds fiat currency.
Is a bitcoin IRA Safe?
Holding crypto always comes with an added degree of risk. Reputable crypto IRA companies partner with a professional custodian for added security, but most of them assume no primary legal responsibility for your holdings.
Gemini builds crypto products to help you buy, sell, and store your bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and access all the tools you need to understand the crypto market and start investing, all through one clear, attractive interface. Gemini Crypto Platform offers excellent account management options. You can manage your account at a glance, view your account balance 24-hour changes and percent changes. Get started with Gemini now.