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For many, the value proposition of Bitcoin is easy to understand, especially in relation to more traditional investments. Bitcoin has a programmatically fixed supply, it exists outside of any central entity’s control and can be considered truly borderless.
But the “how” of bitcoin investment can be a little more daunting. How to take part in the bitcoin ecosystem, how to best invest your dollars into BTC, how to construct this investment so that it is most beneficial and tax advantaged in the long term — in short, how to get started is often the hardest part.
The good news is that there is an easy way to direct traditional investment toward bitcoin that many don’t know about. You can join the bitcoin revolution through a very familiar investment vehicle: your IRA.
A Traditional Investment Vehicle, Made Revolutionary
Here’s how the typical process goes with IRAs: either you or your financial advisor creates an IRA in your name, and then uses it to invest in traditional investments — such as bonds or stocks. And there’s almost no chance that those IRA dollars would ever touch cryptocurrency, meaning that BTC and other alternative assets could never benefit from the tax advantages of an IRA.
Alternative IRA custodians grant you full control to invest in alternative investments beyond the traditional stock market — you make your own decision about where and how to invest your IRA dollars.
A few years ago, the IRS classified bitcoin (and other cryptocurrencies) as property, allowing it to be included in IRAs, along with other investments (called “alternative investments”) like real estate, venture capital, private equity and shares of art.
These alternative IRA accounts, often referred to as self-directed IRAs[1], can be structured in the forms that many investors are used
