For long-term investors seeking to minimize their tax burden on retirement funds, Individual Retirement Accounts, or IRAs, are a sound investment product. There are two common types of IRAs, Traditional and Roth. In a traditional IRA, money is invested tax-free and returns are taxed when the money is withdrawn. In a Roth IRA, taxes are paid up front on money invested into the account and then all future withdrawals are tax-free. Generally speaking, younger people prefer the tax advantages of a Roth IRA. There are limits to the amount that can be invested and when it can be drawn out in both. For more information on IRAs, please refer to rothira.com.

This investment vehicle is available for crypto investing, presenting a tremendous opportunity for investors who have confidence in the long-term future of crypto. By paying the taxes up front for a Roth IRA, investors bypass the 15-20% long-term investment capital gains taxes. Furthermore, the value can be transferred from crypto into a more traditional asset class without penalties as long as the funds are not withdrawn for personal consumption.

Several companies offer IRAs on crypto investments. There are tradeoffs and advantages to each offering. This analysis compares the four major players in the industry: Nabors Group, BitcoinIRA, BitIRA, and Broad Financial. There are distinct differences in terms of cost, control of funds, and security associated with these investment products.

Pricing $840 + 15% of Investment 15%-10% of Investment $240 per year $1,495 + $196 per year $795 up front + $396 per year Self Directed IRA Type Custodian Custodian Custodian with Checkbook Control (LLC) Custodian with Checkbook Control (LLC) Private Key Control Joint Custody (Multi-Sig Wallet) Joint Custody (Multi-Sig Wallet) You do You do Crypto Assets you can invest in BTC, BCH, ETH, XRP, LTC, ETC BTC, BCH, ETH, XRP, LTC, ETC Any Crypto Asset on any Exchange Any Crypto Asset on any Exchange Insured for Stolen Assets Yes $1 Million No No Minimum Investment $20,000 $20,000 None listed $500 Custodian Preferred Trust Kingdom Trust Madison Trust Madison Trust Differentiation Point Xapo Key Security Business Consumer Alliance AAA rating Bitgo Key Security Better Business Bureau AAA rating Price Leader

Before covering differences, investors should be aware of a few things that are consistent. You can start a new Roth IRA account or transfer funds from an existing IRA, although your current financial institution managing your IRA may have fees associated with transferring your account. You can also transition the funds out of crypto into another asset. IRAs for crypto investing are classified as “Self Directed IRAs” and have another financial institution (not the companies reviewed here) that serves as the Custodian.

The major point of differentiation is the Custodian Model vs a Custodian Model with Checkbook control in which the investor personally invests through an LLC account. Both BitIRA and BitcoinIRA use the Custodian model and are more hands-on, in that they manage the trades with selected exchange partners and limited to Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, Litecoin, and Ripple. They both put emphasis on strategic partnerships with well known, trusted crypto security firms, Xapo and Bitgo. Both provide Multi-signature key access, cold storage (not online), and insurance policies for lost or stolen crypto assets they are responsible for.

BitIRA uses a quote from Bill Gates “Bitcoin is a tour de force”. BitCoinIRA also features a very truncated interview clip with Gates, presumably talking positively about Bitcoin. This is the complete opposite viewpoint Gates has stated about Bitcoin on multiple occasions, and he clearly has a negative view of the asset class 1,2. It’s a small point, but inaccurate marketing could potentially be interpreted as a warning flag.

Broad Financial and The Nabors group take a different approach. They set up a “Checkbook Self Directed LLC” for the consumer. Through the LLC, any crypto asset can be purchased from any exchange. The key point of differentiation is that the individual is responsible for his or her own keys. There is no insurance coverage for lost or stolen assets.

Nabers and Broad Financial have smaller up-front cost and are easy for investors with experience securing and managing their personal keys. With Nabers, the LLC is registered in Wyoming and the IRA custodian is Madison Trust, a reputable company in this space. Broad Financial is a larger company with a AAA rating from the Better Business Bureau. They have experience in the Self Directed LLC industry since 2009 and also use Madison Trust.

This choice comes down to personal preference. For consumers who are less familiar with managing their own cryptocurrency, BitIRA and Bitcoin IRA are great options. They are insured and have reputable partners, and with this comes peace of mind and no security maintenance is required by the investor. However, they are significantly more expensive. Nabors is the price leader, but is also a much smaller firm than Broad Financial.

As mentioned at the outset, the intent of this article is to present the options for crypto asset IRAs. It is not intended to be an endorsement of any of the firms or to recommend that investors should invest in a crypto asset IRA.

Disclosure:

This analysis is not intended to be investment advice and you should consult with your financial advisor before making any decisions. I personally have an IRA and hold Bitcoin, Ethereum, Bitcoin Cash, Ripple, LiteCoin, and Ethereum Classic.

http://srv/bindings/506c31e2284a4fb3a7b6cf3a309887c7/code.newsweek.com/bitcoin-bill-gates-warren-buffett-cryptocurrency-berkshire-hathaway-investment-912850

https://srv/bindings/506c31e2284a4fb3a7b6cf3a309887c7/code.theguardian.com/technology/2018/feb/28/bill-gates-cryptocurrencies-deaths-bitcoin-steve-wozniak-scam