As cryptocurrency continues to open new doors for investors, many are asking if it’s possible to hold cryptocurrencies (crypto) and non-fungible tokens (NFTs) in an individual retirement account (IRA). When considering a jump into investing in alternative assets, there’s a big question of how — and where — you can invest that hard-earned cash. There are myriad choices for alternative investments.
For IRAs, the Internal Revenue Service (IRS) has specific regulations for what types of assets are permitted. Before learning how to invest in crypto or NFTs, investors should research each product and focus on their future goals.
Can I Invest in Crypto in My IRA?
You can invest in crypto in an IRA. Buying and selling cryptocurrency can incur risks, but it can also be a profitable venture for investors dedicated to understanding the market.
Crypto tokens are built for various uses. For example, Bitcoin is a payment cryptocurrency that can be used to purchase goods and services. Litecoin and Ethereum were developed to speed up transaction times. Investors can put cryptocurrencies into retirement accounts as they would stock shares and bonds.
How are Crypto Tokens Different than Stock Shares?
How do crypto tokens compare to stock shares? There are many similarities and differences, but both assets bring the potential for gain and loss. Stocks originate from the traditional finance landscape. Cryptocurrencies are born from the modern movement of decentralized finance and are built on blockchain technology. Unlike the stock market, crypto trading is available 24/7.
Crypto is another way to diversify your portfolio and many investors are interested in learning about how new coins and projects could change the world. When investing in crypto, investors are encouraged to perform due diligence, just like with stock shares.
Research can be accomplished by reading whitepapers and looking at each coin’s sentiment and technical specs before deciding. Similar to stock trading, there are several crypto research strategies. Crypto investors can also look at factors like volatility, liquidity, market cap, and market conditions.
Can I Invest in NFTs in My IRA?
Like cryptocurrencies, NFTs are digital assets, but they also have other attributes. The most common other attribute is art, but other documentation and pieces of music can become an NFT. With an NFT, the blockchain transaction has more than raw data attached; there is also something that humans can relate to or use. Recently, companies like SayBlowe have created NFT concert tickets, so there are many uses for NFTs; they just haven’t been fully explored yet.
The IRS does not allow art or collectibles in retirement accounts. However, this doesn’t mean that NFTs won’t be allowed some day.
While you can’t directly invest in NFTs in your IRA, you can hold cryptocurrency tokens that are on the same blockchain as NFTs. Most NFTs are based on Ethereum’s network and you can invest in Ethereum inside a crypto IRA. Ethereum is the second-largest cryptocurrency, after Bitcoin.
Where Can I Create a Crypto IRA?
If you are looking to invest in alternative assets for retirement, cryptocurrencies are popular and potentially profitable products for diversification. Investors can take control of their financial future by creating a self-directed crypto IRA. Bitcoin IRA offers investors a secure1 platform to save for retirement while gaining access to over 60 cryptocurrencies, including well-known coins such as Bitcoin, Ethereum, and Litecoin. Cryptocurrency retirement accounts can offer significant tax advantages2 that can help you keep more of that hard-earned cash.
1Security may vary based on asset chosen and custody solution available.
2Some taxes may apply. We recommend you consult your tax, legal, and investment advisor.