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Access the largest knowledge base for Self-Directed IRAs. Expand your investor knowledge with articles, whitepapers, practical guides and tons of other educational resources.

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For almost 40 years, The Entrust Group has provided account administration services for self-directed retirement and tax-advantaged plans. Entrust can assist you in purchasing alternative investments with your retirement funds, and administer the buying and selling of assets that are typically unavailable through banks and brokerage firms.

You Can Use Your Retirement Account to Invest in Cryptocurrency

You Can Use Your Retirement Account to Invest in Cryptocurrency

Estimated reading time: 2 minutes

 

Cryptocurrency is just one of many alternative assets you can hold in your Self-Directed IRA (SDIRA).

Digital currencies can be bought and sold on exchanges, similar to traditional currencies, with the same potential for gains and losses. As is the case with any new asset class you might add to your allocation plan, adding cryptocurrency to your portfolio mitigates risk, provides a hedge against inflation, and improves your chances for higher returns.

How to Invest in Cryptocurrency With a SDIRA

If you haven’t invested in cryptocurrency yet, but are intrigued at the prospect of using a Self-Directed IRA to do so, here’s what the process looks like at Entrust:

Method #1: Investing in digital currency directly (direct holdings)

  1. Open a Self-Directed IRA.
  2. Fund your account via a transfer, rollover, or cash contribution.
  3. Buy digital currency from your preferred marketplace.

Note that Entrust does not currently allow this method. Stay tuned for upcoming updates.

Method #2: Investing in private digital currency funds

  1. Use this link to open a Self-Directed IRA with Entrust (it takes less than 10 minutes).
  2. Fund your account via a transfer, rollover, or cash contribution.
  3. Submit the subscription/purchase agreement provided by the investment sponsor and a Buy Direction Letter for Private Placement via paper or the Entrust Client Portal.

Method #3: Buying digital currency via an LLC

  1. Use this link to open a Self-Directed IRA with Entrust.
  2. Fund your account via a transfer, rollover, or cash contribution.
  3. Set-up an LLC.
  4. Submit the operating agreement and a Buy Direction Letter for Private Placement via
    paper or the Entrust Client Portal (the LLC is considered an asset in your SDIRA).
  5. Your LLC is ready to purchase cryptocurrency.

By setting up an IRA LLC with checkbook control, your access and control of the wallet you’ll establish to hold your cryptocurrency keys (the data necessary for your crypto’s transmission) is absolute. You will also be able to avoid the significant transaction fees that some providers charge on exchanges. You control the sale and purchasing process of your exchanges and don’t need to allow third parties (like your administrator) access to your keys. 

Curious to learn more about cryptocurrency and the virtual currency market? Watch our webinar featuring Rayhaneh Sharif-Askary, Director of Investor Relations and Business Development of Grayscale.

 

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