Crypto IRA: A guide to investing in cryptocurrency for retirement

• A crypto IRA is a self-directed individual retirement account that holds cryptocurrencies.
• Crypto IRAs offer the benefit of portfolio diversification and the potential for rapid growth.
• Drawbacks of crypto IRAs include high fees, security risks, and extreme volatility. 

Crypto IRAs are designed for advanced traders who aim to boost their retirement savings by leveraging blockchain technology. The same contribution limits, tax benefits, and withdrawal rules apply to crypto IRAs as traditional and Roth IRAs.

However, cryptocurrencies held in a retirement account are still suspectable to the same volatility, security, and regulatory risks that come with buying cryptocurrencies. For that reason, crypto IRAs are not recommended for beginners or risk-averse investors.

What is a crypto IRA?

Often called a bitcoin IRA, a crypto IRA is a specialized self-directed retirement account designed to hold cryptocurrencies like bitcoin and altcoins. These accounts offer greater portfolio diversification, tax advantages, and the potential for high growth over the long term.

Traditional banks and brokerages don’t offer crypto-specific IRAs. Instead, bitcoin IRAs and similar crypto-backed accounts are available through specialized custodians, including some of the best cryptocurrency exchanges.

The best bitcoin IRAs are highly secure platforms with low trading fees, quality custom support, cold-wallet storage, and a user-friendly interface. Management and trading fees can be quite high with crypto IRAs.

If you already have a well-funded and diversified retirement portfolio and are looking to open a crypto IRA, you stay informed on current regulatory rules and requirements involving cryptocurrency and blockchain trading.

The pros of crypto IRA

Saving for retirement throughout your career and taking advantage of compound interest is key to building wealth for your golden years. Including bitcoin in that savings strategy through crypto IRAs can come with benefits, including:

Potential for high returns

While there have been plenty of cryptocurrency downfalls, there have also been returns that outpace other markets. In September 2019, bitcoin’s price was around $10,000 per coin. Fast-forward six years, and bitcoin’s price fluctuates between $97,000 and $100,000 per coin. If the bitcoin enthusiasts are right and cryptocurrency is here to stay, it could continue to grow over the years.

Moreover, only a limited number of bitcoins exist, suggesting the potential for high growth if the demand for the currency remains. As of 2025, 21 million bitcoins are available for trading, with nearly 1.08 million left to mine.

Diversification

When you invest in a traditional IRA, you’re likely buying a mix of stocks and bonds from various sectors and sizes via investment funds. This diversification is important since it helps ensure that when one area of your portfolio suffers, another is holding steady or performing well.

Victoria Bogner, a financial planner and director of client experience at Allworth Financial, told Business Insider that investing in cryptocurrencies tends to be “a great diversifier” for your financial assets. Holding a bit of bitcoin “can be a good way to own something that doesn’t move exactly like the rest of your investments move,” she says.

It could also be a hedge against inflation as the dollar’s value against some other currencies has declined.

“A self-directed IRA has a little bit looser IRS rules, so you can hold things like property” or other alternative investments, Bogner says.

Tax advantages

Similar to Roth or traditional IRAs, crypto IRAs offer tax benefits such as tax-deferred growth or tax-free withdrawals. The kind of tax advantages you receive depends on whether you fund your account with tax-deferred or after-tax dollars. 

For example, the IRS taxes bitcoin as an investment, so it’s subject to a capital gains tax when you sell it at a profit — but not if it’s held in your IRA. That gain is tax-shielded, as are any transactions within an IRA. You only pay taxes on funds that you withdraw.

The cons of crypto IRAs

Although cryptocurrencies offer a potential for growth that has historically outperformed other markets, their susceptibility to risk is just as high.

There are potential issues you should consider before buying bitcoin for an IRA, including:

Volatility

Cryptocurrencies are known for their volatile price swings. Unlike traditional assets tied to the US dollar or gold, the value of cryptocurrencies is primarily driven by investor demand and speculation. So, if investor confidence in a particular cryptocurrency diminishes, its price can plummet rapidly without guaranteeing recovery.

“There’s a reasonable chance that volatility with bitcoin will continue for a while,” says Chris Chen, a certified financial planner at Insight Financial Strategists.”If you’re going to invest for retirement, you really have to think in terms of how you will deal with that volatility.”

Security

Hacking, phishing scams, and other fraudulent activity are common in the crypto world since the crypto trading market and its regulatory systems are still in their infancy. Not only do exchanges and IRA providers lack certain jurisdictions, but individual investors are also vulnerable to tricks that may reveal sensitive information, such as their private keys.

Fortunately, industry-leading crypto exchanges have implemented more advanced security protocols, such as external cold storage, two-factor authentication, and more reliable customer support. Crypto exchanges also increasingly comply with anti-money laundering procedures to prevent illegal activity on their platforms.

Regulatory uncertainty

While they’re called custodians, firms that offer self-directed IRA services — especially in the relatively young crypto IRA space — are not necessarily as responsible as conventional brokerages, registered investment advisors, and other financial services firms are.

The cryptocurrency industry also has a track record of scams, fraudulent activity, and bankruptcy.

Crypto custodians are not bound by fiduciary rules that demand they put your interests first. Until recently, crypto custodians weren’t regulated at all by federal authorities. The SEC and Commodity Futures Trading Commission (CFTC) are among a handful of regulatory authorities overseeing these platforms.

Fees

Nowadays, many brokerages offer zero-commission trading on stocks and ETFs. But the same can’t be said for cryptocurrency exchanges. In fact, between commission fees and other costs like maintenance fees, the cost of a bitcoin IRA can add up.

Limitations

Bitcoin IRAs have to adhere to the IRA contribution rules from the IRS. In 2024 and 2025, that means you can’t contribute more than $7,000 or $8,000 if you’re age 50 or older to a bitcoin IRA.

Plus, bitcoin IRAs may come with their own limitations, like requiring you to trade on a certain exchange or offering a limited selection of cryptocurrencies.

How to open a crypto IRA

As the “self-directed” implies, these IRAs are directly managed by the account holder (as opposed to a financial advisor or money manager). And your regular brokerage, bank, or investment app probably doesn’t handle them. Self-directed IRAs are only available through firms that specialize in the type of asset you’re interested in. 

1. Choose a crypto IRA custodian

Some of the better-known, established companies that let you set up Bitcoin IRAs include:

You can visit the IRA provider’s website or call its customer service line to confirm and compare its fee structure and operations. You should also ask how your assets will be stored and about security procedures and measures.

2. Open a self-directed crypto IRA

Once you find a provider, you must provide essential personal information like your legal name, Social Security number, address, date of birth, and bank account information. You may also need to answer questions about your investment goals, risk tolerance, experience level, and estimated retirement age.

3. Fund your crypto IRA account

Like with any IRA, you can fund your crypto IRA with either pre-tax or after-tax money directly from your bank account or via a rollover from an existing IRA, 401(k), or other tax-advantaged account.

A 401(k) rollover is one of the easiest ways to extend tax benefits without incurring high management fees. 

4. Purchase cryptocurrency

Once you have funds, you can buy cryptocurrencies through your IRA provider. Which coins and tokens are available to you depends on the platform, but the process is similar to buying and trading crypto through an online custodian. 

Tax implications of crypto IRAs

Contributions and earnings in a crypto IRA offer the benefit of tax-free growth or withdrawals, but there are tax implications you should be aware of.

Traditional crypto IRA

In some ways, bitcoin IRAs work like regular IRAs. While you can set one up with any amount of funds, they have annual contribution limits set by the IRS: In 2024 and 2025, you can contribute up to $7,000 a year or $8,000 if you’re 50 or older.

Like with a regular traditional IRA, any accumulated interest or capital gains generated by the investments within your cryptocurrency IRA grow tax-free. You won’t be taxed until you withdraw during retirement. Still, you must be at least 59½ to avoid a premature withdrawal penalty. 

Roth crypto IRA

Roth crypto IRAs function relatively the same as any Roth IRA: The account is funded with after-tax money for tax-free growth and withdrawals. Roth IRAs are preferred by investors who project they’ll be in a higher tax bracket when they retire and start withdrawing money from the account.

Bogner says the Roth version might have an edge, especially “if you are of the mindset that bitcoin will explode” in future prices. Since the Roth is funded with after-tax dollars, it won’t owe anything on its bitcoin gains — even if the currency has gone up 10 or 20 times. 

FAQs about crypto IRAs

Tessa Campbell

Investing and Retirement Reporter

Tessa Campbell is an investing and retirement reporter on Business Insider’s personal finance desk. Over two years of personal finance reporting, Tessa has built expertise on a range of financial topics, from the best credit cards to the best retirement savings accounts.ExperienceTessa currently reports on all things investing — deep-diving into complex financial topics,  shedding light on lesser-known investment avenues, and uncovering ways readers can work the system to their advantage.As a personal finance expert in her 20s, Tessa is acutely aware of the impacts time and uncertainty have on your investment decisions. While she curates Business Insider’s guide on the best investment apps, she believes that your financial portfolio does not have to be perfect, it just has to exist. A small investment is better than nothing, and the mistakes you make along the way are a necessary part of the learning process.Expertise: Tessa’s expertise includes:

• Credit cards
• Investing apps
• Retirement savings
• Cryptocurrency
• The stock market
• Retail investing

Education: Tessa graduated from Susquehanna University with a creative writing degree and a psychology minor.When she’s not digging into a financial topic, you’ll find Tessa waist-deep in her second cup of coffee. She currently drinks Kitty Town coffee, which blends her love of coffee with her love for her two cats: Keekee and Dumpling. It was a targeted advertisement, and it worked.

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