Yes, your IRA can invest in and own bitcoin and other cryptocurrencies. Bitcoin is a form of virtual currency using blockchain technology. Bitcoin can be exchanged between people for goods, services and of course, dollars.
From 2011 to September 2017, the value of Bitcoin has risen from $0.30 per Bitcoin to a shocking $3,772 per Bitcoin. As a result, investors are beginning to seriously consider whether their retirement account can invest in and own actual Bitcoin or other forms of cryptocurrency. Maybe you are too, now that you just read that. I can't blame you.
Yes! Your IRA can own Bitcoin and other forms of cryptocurrencies, such as Ethereum and Litecoin. The only items your IRA cannot invest in is life insurance, S-Corp stock and collectibles.
The IRS has stated that Bitcoin and other forms of virtual currency are property. The sale of property by an IRA is generally treated as capital gain, so the buying and selling of cryptocurrency for investment purposes wouldn’t trigger unrelated business income tax (UBIT) or other adverse tax consequences that can occasionally arise in an IRA.
There are already publicly traded funds and other avenues (Bitcoin Trusts) where you can own shares of a fund that in turn owns Bitcoin. But, if you want to own Bitcoin directly with your IRA, you’d need to follow the steps above.
Don't underestimate Bitcoin and other forms of cryptocurrency. You're living in the digital age now. Cryptocurrencies have great potential, as of this writing one Bitcoin is worth $3,772 , almost triple that of an ounce of gold. Times change.
However, as with any new investment, make sure you proceed with caution. Who knows, by the time you read this article, Bitcoin could be worth nothing, or it could be well on its way to being the "currency of the future". Just to give you an idea, the value of Bitcoin is about as volatile as a Dutch Tulip...(pictured below, click the link if you don't know about "tulip mania")
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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