Bitcoin Bites Back: Cryptocurrency steps into the mainstream despite setbacks

Leave your thoughts

Bitcoin is slowly moving from an online niche investment into more traditional savings plans such as Individual Retirement Accounts.

As with more traditionally funded IRA’s, there are some significant tax benefits to a cryptocurrency retirement plan. Anyone that holds an IRA is legally entitled to deduct their contributions from their income tax returns every year, up until the collection of disbursements, which as things currently stand in the United States is 59.5 years of age.

However, it would be fair to say, that although there are no differences in the tax benefits of an IRA due to funding, the number of providers who currently accept cryptocurrency, or property options are very limited. As the popularity of cryptocurrencies becomes more mainstream, there is a possibility that this will change, but be aware that at present it is viewed as a niche option. About 38% of American use IRA’s as a savings option, according to Greene IRA.

New Options

At the time of writing, there is only one firm Bitcoin IRA that provides the option to investors of putting cryptocurrencies directly into their IRA’s. The company uses Kingdom Trust and Bit Go which is based in Palo-Alto for their storage. Bitcoin IRA began accepting its first accounts in June 2016 and has recently expanded to offer Ethereum IRAs as well. ( The company has some high profile respected financiers involved within the company including former Us Mint director Ed Moy in the role of advisor.)

Under certain circumstances, investors who have money in 401ks through their employes can transfer those funds into these IRA’s should they so wish.

Bitcoin IRA’s tend to be favored by technologically savvy investors or people who work in the technology field. As bitcoin gains a wider understanding amongst the general public the profile of investors in Bitcoin IRA’s is likely to change, expanding to include people who are not necessarily interested or knowledgeable about technology and are motivated by the gains and profits to be had from trends in digital currency prices.

Bitcoin IRA charges clients a one-time fee that is payable at the time of opening their account. The charges are 15% on deposits of $15,000 to $100,000, 13% on $100,000- $200,000 and 11% on deposits of $200,000 and above.

There are further charges from Mineweb – a BitCoin IRA partner, who charge a custodian fee for holding bitcoins in a multi-signature wallet. The benefit of this and why it is worth the expense is that it enables investors to verify funds in real time,

Demand Awareness And Interest In Bitcoin Is Rocketing

In recent months the price of Bitcoin has rocketed, which has understandably led to a huge surge in interest from investors to buy Bitcoin anywhere around the world, from the UAE to China, although the latter has recently been thrown into doubt due to regulations. To put this into perspective, at the end of 2016 the price of bitcoin stood at around $1000 and nearly three-quarters of the way through 2017 the price stands at $2000. In other words in the space of about eight months, the price has doubled and shows no signs of slowing down.

Various economists predict that in the not too distant future, bitcoin will be just as common a commodity in IRA’s as stocks or bonds. In many ways, Bitcoin is a better choice, as deflationary currencies such as Bitcoin actually increase in value over time. NOTE – Not all cryptocurrencies are deflationary, so ensure that you complete due diligence before investing.

It is not just bitcoin that has enjoyed meteoric growth in recent years, Ethereum has performed even better growing by 900% since the start of 2017, in fact, the cryptocurrencies combined market cap has spiked at an impressive 80% in the last month alone.

There are also other options available to investors, who want to cash in on the growth, but are perhaps less enthusiastic about holding cryptocurrencies. Grayscale Investments is a digital currency startup that provides investment products that are strictly limited to high-net-worth investors. They work in combination with IRA administrator The Entrust Group.

This option will not be available to many people, as they will only accept accredited investors. To be an accredited investor, you must have a net worth of $1million or be able to demonstrate that you had an income of $200,000 for each of the last two years.

It is important to note that both Bitcoin IRA and The Entrust group are classed as self-directed IRAs. The account owner is responsible for any investments made, including understanding any tax consequences of those investments.

In January the Government Accountability Office produced a report which called for more clarity and transparency on the tax liabilities of lesser-known IRA investments. This call was made to ensure that investors were fully aware of their tax responsibilities when using these investments.

Virtual currencies, for instance, are classified as properties by the IRS. In recent years IRS officials have begun to compile data on all of the alternative IRA investments, which will incorporate cryptocurrencies. Their findings will be released before the end of 2017.

Originally published at on September 22, 2017.

Categorised in:

Leave a Reply

Your email address will not be published. Required fields are marked *