Recently, we made the announcement so many of you have been asking for. (Seriously, we have the raving tweets, TrustPilot reviews, emails, and DMs to prove it.) We’re officially launching staking through our integration with Coinbase—beginning with our Solana staking pilot.
Finally, the opportunity is here to earn rewards for staking crypto in an IRA. And you’re invited to join the pilot! Add your name to the waitlist today to become one of the first people to stake Solana in an Alto CryptoIRA®.
Sign up for the opportunity to stake Solana in your IRA through Coinbase.
Then read on to learn more about Alto’s Solana staking pilot and the reasons for staking in an IRA. But first, a quick review of what staking is.
What Is Staking?
Without getting too technical, there are two primary methods (or “consensus mechanisms”) for validating transactions on a blockchain: proof-of-work and proof-of-stake.
The first, proof-of-work (PoW), is most commonly associated with Bitcoin and entails what is called “mining.” Mining involves devoting computational resources to solving a complex mathematical problem, which other miners verify. The first miner to solve the equation gets to validate the block of transactions, and receives crypto in return.
The second method, proof-of-stake (PoS), aims to solve for the inefficiencies of proof-of-work. Rather than mining, it involves crypto holders pledging (or “staking”) their assets to validate blockchain transactions. During this time, those assets cannot be sold or traded (typically called a “lockup period”). And because the amount staked plays a role in who gets to validate transactions, crypto holders’ assets are often “pooled.” In exchange for validating new blocks of transactions, stakers earn rewards.
So in the case of Alto’s pilot, the SOL you stake will be used to build the Solana ecosystem. Pretty cool, huh? It gets better…
Could an IRA Be the Best Place to Stake Solana?
Staking offers long-term crypto holders the opportunity to earn rewards denominated in units of an investor’s staked coins. But it can also make for a tax nightmare. To understand why this is, let’s look at the tax reporting complications that occur when staking outside of an IRA.
Staking Outside of an IRA
When you stake, rewards are added to your account at intervals set by the blockchain protocol. Though staking still presents a number of regulatory questions from a tax standpoint, it’s likely that each reward represents another cost basis. (A cost basis is the amount something is worth at the time you purchase or receive it.)
When you sell your crypto, you are required to report exactly how much you earned on each reward and pay taxes on those gains. The more individual purchases of crypto you make—or, in this case, the more rewards you receive—the more complicated that process may become. Even if you sell your holdings in a single transaction, you’ll likely still need to break out the value of each purchase or reward granted to you and determine your capital gains tax.
But that’s not all. Should the IRS treat staking the same way it does mining, which some tax experts believe it will, then you would also pay income tax on any rewards received.
Staking in an IRA
With an IRA, though, as long as you wait until you’re eligible to take distributions, you can buy, sell, and earn crypto without the burden of reporting each transaction on your personal taxes.*
Not only that, the long-term nature of an IRA makes it a great place to stake crypto. While you can buy and sell crypto within your IRA at any time, many investors choose to HODL. Staking in an IRA also enables you to tap into another source of investment funds by rolling over money from a 401(k), 403(b), 457, TSP, or IRA.
So why not earn rewards while HODLing and let your returns compound over time? Now you can do just that with Solana, thanks to Alto’s integration with Coinbase.
*Investing in cryptocurrencies is inherently risky and you should consult an investment professional before selecting an investment or direct any staking activity in your IRA. Staking is an evolving investment opportunity and you should consult a tax professional to determine the tax liabilities to your IRA regarding advanced protocol activities such as staking.
How Alto’s Solana Staking Pilot Works
Over the course of the six-month trial, you may earn up to 4% APY in units of SOL** on any Solana you stake. You’ll also play an important role in helping us improve our offering by providing feedback about your experience. That includes deciding which coins Alto stakes in the future. Stakeable assets under consideration include Ethereum (ETH), Cardano (ADA), and Polkadot (DOT).
However, the first step is to join the waitlist. You’ll then receive regular email updates about when you can begin staking Solana in your IRA and what you can do to get ready.
To be eligible to start the six-month pilot, participants must:
- Have an Alto CryptoIRA (traditional, Roth, or SEP)
- Hold (and be willing to stake) at least 25 SOL
Additionally, because we’ll be admitting accounts in groups, priority will be given to those who already meet the requirements, so it’s a good idea to open your crypto IRA account now.
When the pilot officially launches, Alto will ask how much SOL you would like to stake and request that you execute a Direction of Investment (DOI). Once you’ve signed the DOI, your SOL will be staked to a public validator node provided and operated by Coinbase.
**Percent rewards as depicted are based on the present reward value depicted by the protocol in question, net of fees, and adjusted at the sole discretion of the protocol. Alto has estimated a 4% APY, net of fees, based on the rate set by Solana. Returns may be greater or lesser than stated. For more information, visit Solana’s Staking page.
Get On the Waitlist to Stake Solana in Your IRA
Ready to become one of the first people to stake Solana within an IRA? Fill out the form to join the Alto CryptoIRA staking pilot waitlist.
Alto is an administrator of self-directed individual retirement accounts and is not a registered or licensed broker, dealer, broker-dealer, funding portal, cryptocurrency exchange, digital asset wallet or node operator, investment advisor or investment manager. Alto does not provide investment advice or recommendations about any specific investment or asset. Investing in cryptocurrency, including staking, involves significant risks.