What is a crypto IRA?

A cryptocurrency individual retirement account (a crypto IRA), is a specialized retirement account that allows individuals to include digital currencies like Bitcoin and Ethereum in their retirement portfolios by investing with the dollars they’ve previously saved in an IRA.

Crypto IRAs operate as self-directed IRAs, providing investors with the ability to allocate a portion of their savings to cryptocurrencies. Doing so offers them diversification benefits, but there’s still risk involved due to the volatility of the cryptocurrency market.

Like all self-directed IRAs, crypto IRAs typically require a custodian to manage the digital assets and ensure compliance with Internal Revenue Service (IRS) regulations.

Crypto IRAs are subject to specific regulations from the IRS and must comply with contribution limits set by the IRS to maintain their tax-advantaged status.