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New York Self-Directed IRA for Cryptocurrency

New York Self-Directed IRA for Cryptocurrency
4 Minute Read

In IRS Notice 2014-21, the IRS issued guidance on the tax treatment of cryptos.  In the Notice, the IRS confirmed that cryptos, such as Bitcoin, would be treated from a federal income tax perspective as a capital asset such as property, like a stock or real estate.  In other words, one can make cryptocurrency investments with their retirement funds, just like stocks and mutual funds. The sale of a cryptocurrency is not subject to tax and all gains are tax-deferred or tax-free in the case of a Roth IRA or 401(k) plan.

Key Points
  • New York regulations make it tougher to invest in cryptocurrency
  • It’s best to work with a regulated IRA trust company
  • Investing in cryptos, an emerging asset class, is a good way to diversify your holdings.

Can I By Cryptos in New York with a Retirement Account?

Yes.  We are very proud to have the industry’s best solution for buying Bitcoin and other major cryptocurrencies on an exchange in the name of an IRA or 401(k). IRA Financial is the first Self-Directed IRA company to allow their clients to invest in cryptocurrencies, such as Bitcoin, directly via a cryptocurrency exchange without the need for a third-party broker or the use of an LLC.  Now, investors can use their retirement funds to buy all the major cryptocurrencies directly through Gemini, one of the leading US cryptocurrencies exchange.  Gemini is a regulated cryptocurrency exchange with a New York State trust license.

Why do some Companies not offer New York Self-Directed Retirement Solutions?

In general, New York State has been very aggressive in pursuing companies that are involved.  Recently, New York Attorney General Letitia James filed a lawsuit against Lear Capital, a precious metals dealer, for not being registered as a commodity broker-dealer, commodity investment advisor, or a telemarketer — all as required by New York law.  Like gold, New York State treats cryptocurrency as a commodity. The  Appellate Division, First Department, held that a virtual currency was a commodity under New York’s Martin Act, and that the Martin Act’s definition of a commodity was broader than the federal definition under the Commodity Exchange Act. Hence, a failure to register as a commodity broker-dealer, salesperson, or investment advisor is both a fraudulent practice and a crime under the Martin Act

There are a number of companies that are essentially crypto brokers helping retirement investors buy and sell cryptos on an exchange for a commission, in some cases, quite excessive. These companies are generally unregulated.  As a result of not being regulated, these companies are fearful of being pursued by the NY State Attorney General for failure to register as a commodity broker.  It is best practice to only work with a regulated IRA trust company, such as IRA Financial Trust Company, and crypto exchange when investing in cryptocurrencies with retirement accounts.

    Crypto Info Kit

    Get the Info Kit

    IRA Financial & Gemini Exchange

    IRA Financial’s new cryptocurrency solution is the first to allow retirement holders to hold cryptocurrencies in an IRA directly on an exchange.   The account is opened in the name of the IRA but controlled by you as the authorized representative on the account.  The IRA holder has 100% control over the account and can trade anytime.  Also, the IRA holder has 100% control over their private keys and can hold the cryptos in a cold wallet.  

    What Cryptos can I Buy with Gemini?

    Gemini is one the largest cryptocurrency exchanges in the country. With over 35 cryptocurrency coins on their platform, Gemini will have all your favorite coins on its platform.  Gemini is a New York trust company regulated by the New York State Department of Financial Services (NYSDFS). They are subject to capital reserve requirements, cybersecurity requirements, and banking compliance standards set forth by the NYSDFS and the New York Banking Law. Gemini is also a fiduciary and qualified custodian.

    Below is a list of some of the more popular cryptocurrencies available on the Gemini platform:

    https://www.gemini.com/prices

    Can I hold the Private Keys?

    As Jack Dorsey famously said at Bitcoin Miami conference in June 2021, “No keys – No cheese.”  Gaining the power to control your Bitcoin or other cryptocurrency private keys is essential to maximizing the security of your Self-Directed IRA or Solo 401(k) Bitcoin or crypto investments. IRA Financial is the only provider that will allow you to buy and sell cryptos in a Self-Directed IRA or Solo 401(k) on your own through Gemini and control your own private keys. 

    With the IRA Financial-Gemini platform, you can purchase cryptocurrencies and then move them off the exchange to a cold wallet you control and hold personally.  You can then link your cold wallet to a Decentralized Cryptocurrency Exchange (DEX), such as Uniswap or Sushiswap, to trade your cryptos.

    How Does Your Platform Work?

    invest in cryptos

    What if I Don’t Want to Use Gemini?

    No problem!  You can always set-up an IRA LLC and use any other exchange of your choice, including Coinbase or Kraken, and purchase those cryptos in the name of the LLC. You still control the entire process on your own, without the need for expensive brokers. 

    IRA Financial can help establish your Self-Directed IRA LLC and connect with you with the exchange of your choice.

    Conclusion

    Investing in cryptocurrencies with your retirement funds can be risky and volatile. Don’t increase your risk by working with unregulated cryptocurrencies brokers charging high commissions.  Their our far better, safer, and more cost effective crypto IRA retirement solutions available. If you are in New York and want to invest in cryptos, look no further than IRA Financial!

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