Investing in Cryptocurrency with Your Self-Directed IRA

Excited about investing in cryptocurrency and digital assets, but worried about the tax-treatment for any gains or losses? Well, you are certainly not alone in your concerns; and Rocket Dollar offers one of the great tax-advantaged ways to invest in the space, without having to navigate the challenging tax environment surrounding the asset class.

Types of crypto investments

There are a few ways to diversify your portfolio into digital assets, all of which work well in a Self-Directed retirement account:

Purchasing cryptocurrency directly through a centralized exchange or market maker provides the store of value function that is so exciting with digital assets. There are also a number of managed funds and structures that offer a great way to gain exposure to the asset class, without the responsibility that comes with some of the other conduits.

The growth of the space has facilitated the launch of many promising startups. Investing in these companies’ blockchain-enabled businesses provides access to the growth potential in a more approachable format for many angel and early-stage investors.

These methods each have their strengths and weaknesses. With some offering very direct, but transactionally complicated investments. To those, that may be very accessible, but not 100% correlated to cryptocurrency as a store of value—i.e. owning Bitcoin directly.

Questions to ask before you invest

Some things to consider when preparing to invest your retirement dollars in such a structure are:

• Do I want to own a digital asset directly? Taking on the responsibility of choosing an investment and storage mechanism for my account.
• Am I comfortable with a manager directing my funds across the crypto space in a more traditional hedge-fund type structure?
• Would I rather allocate to companies and ideas that are taking advantage of and growing alongside blockchain technology? This could mean that the startup investment I make will not fail or succeed simply as a function of the success of the blockchain ecosystem but can thrive on its own irrespective of crypto market fluctuations.

At the end of the day, there are tons of amazing ways to unlock your retirement dollars with a crypto or digital asset investment. Capturing any of the high return opportunities within a tax-advantaged account like a cryptocurrency IRA is a great place to start. From there you can assess your own personal investment goals and hone in on the right investment tool for you.

The good news is that the market is becoming more mature and robust each day. Advances in regulatory and market structures are helping grow the number of interesting and exciting options available to investors. We encourage to you learn and consider the space for your portfolio if only to build an understanding and comfort level for future opportunities.

Learn more in The Rocket Dollar Guide to Self-Directed Retirement Plans

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