Can You Hold Cryptocurrency in a Self-Directed IRA?

The rise of digital assets like Bitcoin and Ethereum has opened new doors for retirement investors looking to diversify beyond traditional stocks and bonds. If you're wondering whether you can hold cryptocurrency in a Self-Directed IRA (SDIRA), the answer is yes, and we’re here to guide you through the essentials.

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What Is a Self-Directed IRA?

A Self-Directed IRA is a powerful retirement account that lets you invest in alternative assets, including real estate, private equity, precious metals, and yes, cryptocurrency. It provides the same tax advantages as traditional IRAs, but with a broader range of investment opportunities.

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Is Cryptocurrency Allowed in an IRA?

Yes. The IRS classifies cryptocurrency as property, making it a permissible asset within an IRA. However, it must be held by an IRS-compliant custodian or third-party administrator and meet all relevant tax and reporting requirements.

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What Cryptocurrencies Can I Invest In?

Through a Self-Directed IRA, investors can typically purchase well-known digital currencies such as:

• Bitcoin (BTC)
• Ethereum (ETH)
• Litecoin (LTC)
• In your Mountain West IRA account, you have the ability to hold over 70 types of cryptocurrency.

Keep in mind, your IRA can only purchase and hold crypto through an authorized process; personal wallets and exchanges are not permitted.

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What Are the Tax Benefits?

• Traditional SDIRA: Contributions may be tax-deductible, and earnings grow tax-deferred.
• Roth SDIRA: Contributions are made after-tax, but qualified withdrawals — including crypto gains — are tax-free.

This tax-advantaged growth can make a big difference, especially with such a volatile and potentially high-growth asset.

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Key Rules to Follow

Investing in crypto with a Self-Directed IRA does come with strict IRS guidelines:

• Your IRA, not you personally, must own the crypto.
• Private keys cannot be held by you. This would be a prohibited transaction.
• A qualified custodian must hold the IRA and use a secure, compliant wallet setup.
• Crypto staking, margin trading, and crypto lending are not allowed within the IRA.
• Annual valuations are required for IRS reporting, even if you're not taking distributions.

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Risk vs. Reward

Cryptocurrency can seem exciting, but it also comes with high volatility and risk. If you're considering adding crypto to your retirement strategy, make sure it aligns with your overall goals, risk tolerance, and time horizon.

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Final Thoughts: Get Professional Guidance

Navigating crypto within a Self-Directed IRA requires careful planning and compliance. That’s why it’s important to work with a custodian who understands both digital assets and IRS rules — and to consult your CPA or financial advisor before making any investment decisions.

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Ready to Explore Crypto for Your Retirement?

Mountain West IRA makes it easy to diversify your Self-Directed IRA with cryptocurrency and other alternative assets directly in your IRA — all while staying IRS-compliant.

Get in touch to learn the proper way to purchase cryptocurrency in your IRA, no LLC needed.

📞 Call us at 866-377-3311
📅 Schedule your free consultation