Digital currencies (aka cryptocurrency) can be an investment for your IRA.
Bitcoin, Ethereum, and other cryptocurrencies are a decentralized currency.
Blockchain technology is at the core of digital currencies.
Digital Currency, also referred to as Cryptocurrency is getting a lot of attention in the financial markets. The most popular “coin” is Bitcoin but others are gaining notice as well. The Digital Currencies are based on a decentralized record keeping system, or ledger called blockchain. As with any financial assets, Digital Currency is an asset that investors are thinking about including in their self-directed IRA or HSA. Investors are exploring Bitcoin, Ethereum, Litecon, and other such digital currencies which were categorized as property in 2014 via IRS Notice 2014-21. That designation has made it possible for self-directed IRA accounts to acquire cryptocurrencies as investments.
Generally direct ownership of cryptocurrency involves a “digital currency exchange” which sells the currency in exchange for US Dollars. Some exchanges only deal with swapping one Digital Currency for another rather than handling fiat currency (such as US Dollars or Euros). Once acquired, digital currency is accessed for payments or use in transactions via use of a “private key” specifically for that particular currency. Movements of Digital assets incur fees. Usually paid in the form of the digital currency starting the transaction.
Distributions of plan owned digital assets may be made in kind.
An IRA, HSA, or other self–directed plan may acquire digital assets by working with a third party that has a relationship with an exchange. Once acquired, New Direction maintains control over the asset. Secure storage of the access “private key” is provided via our proprietary hardware, wallet-based cold storage system.
Currently, New Direction provides purchases and sales of Direct Ownership of digital currency via select third parties who handle transactions for a fee. Please contact us at firstname.lastname@example.org or 877.742.1270 x185 for more information.
Investors may acquire equity ownership in an exchange traded funds or trust or similar entity with positions in Digital Assets. Instead of owning the crypto currencies themselves, the equity owners would share in the ownership with other investors. Such entities may or may not be offered to the public on national stock exchanges or similar.
For publicly traded entities, New Direction account owners can access the shares via a brokerage account set up for the plan. Once the brokerage account is established, you may trade shares at your leisure on line.Brokerage Account Transaction Guide
For non-publicly traded entities, the IRA investment would be made via a private equity process.