As interest in crypto has stirred anew, some long-term investors have chosen to invest in digital assets through an instrument that provides tax advantages — a self-directed Individual Retirement Account (IRA).
Cointelegraph
February 10, 2020
By Robert Stowe England
Interviews by Cointelegraph with people who have opened crypto IRAs suggest they have attracted both sophisticated veterans who have made millions in cryptocurrency, as well as those who may not have profited greatly so far — but who still have faith in the future. The IRAs have also attracted newcomers who are willing to dip a cautious toe in the digital asset pond.
The self-directed IRA, while administered by custodians or trustees, allows investors to purchase, hold and sell alternative assets including precious metals and real estate. Depending on the provider, self-directed IRAs may also have investment choices that include stocks, mutual funds and ETFs (exchanged-traded funds). There are both traditional and Roth versions of the self-directed IRA.
Investors in our survey who have set up crypto IRAs find it a compelling proposition. “I do believe in the space and find it intriguing enough to set aside a small portion of my retirement funds to invest into crypto,” says Derek Price, 39, who lives in central Pennsylvania near Harrisburg and opened a self-directed traditional crypto IRA account several months ago.
“Certainly it’s a speculative investment. I realize it’s not a slam dunk,” Price says. “I’m fully aware the coins being offered today may not be around tomorrow,” he explains. “I still have 401(k)s and other retirement savings accounts invested in traditional assets, so I will continue to be diversified,” he adds.
Price originally invested in crypto in 2017 just before “the market went bananas,” garnering him significant gains. At the same time, however, he was concerned that he was not tech savvy and was worried about investing on exchanges where his holdings might not be secure. So, he got out of the market ahead of crypto winter.
Price heard about the crypto IRA from a friend and decided to give it a try after learning that assets are held by a custodian and investors can check, verify and track their digital holdings. This time he would hold his crypto assets for the long term. “I have a longer runway. My approach might be different if I was closer to retirement. If I was in my 50’s I might look at it differently than now in my late 30’s. If it doesn’t work out, I have many solid years left to save. It won’t be ruining my retirement.”
His crypto IRA is sponsored by iTrust Capital of Encino, California. Like many other firms that currently offer crypto IRAs to consumers, iTrustCapital is a platform. It is not a custodian, digital wallet or an exchange. The company’s crypto IRAs are administered by its custodian, SunWest Trust of Albuquerque, New Mexico, while assets are stored with Curv, an institutional wallet service based in New York City, according to Blake Skadron, chief operating officer at iTrustCapital. The company was started in 2018 and had “a soft launch” in July 2019, he said. It has not been offering crypto IRAs long enough to be rated by the Better Business Bureau.
“Funds move over to a platform we manage. Customers can log into their account and they can self-trade 24 hours a day seven days a week,” says Skadron. “We don’t employ salesmen and we don’t give investment advice.” He faults some other crypto and gold IRA providers for hiring a sales force to market their accounts and make claims about the value of the investment even though they are not financial advisers.
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