Investing in Cryptocurrency
Cryptocurrency provides a way to trade goods and services across the globe without government regulation or centralized oversight. Transactions are performed on self-regulating platforms that are visible for the public to see. This self-regulation ensures stability, prevents double spending, and helps create longevity to ensure value as a viable currency or asset within the broader scope of e-commerce.
Virtual currency is bought and used by individuals, vendors, businesses, and even countries who allow its use. Investing in cryptocurrency like Bitcoin, Litecoin, Ethereum, and others is possible in a self-directed IRA. Profits are paid directly to the IRA without any taxable liability other than those that apply when you retire.
Three ways to invest in Cryptocurrency
- Buy and sell like forex and futures trading on an online platform
- Invest in the blockchain mining process
- Invest in Bitcoin Trust, ETFs, and hedge funds
INVESTING IN CRYPTOCURRENCY IN AN IRA
- Choose a platform that can title the ownership in in your IRA’s name
- Cryptocurrency may not be purchased personally and sold to your retirement plan
- Make sure the platform’s investing procedures comply with IRS rules and regulations
- For income tax reporting purposes, digital currency is deemed personal property by the IRS as stated in Internal Revenue Bulletin 2014-16, Notice 2014-21.
- When held as an asset in an IRA, it receives the same tax-sheltered treatment as any other investment in your retirement plan.