Many investors know about the traditional IRA and Roth IRA, but fewer know about self-directed IRAs, which enable alternative investments including crypto. This structure is critical if you want to place digital assets in a retirement wrapper.
A self-directed IRA is an IRA where the custodian permits a wider set of assets—not just stocks, bonds or mutual funds. Instead, self-directed accounts can allow real estate, private company stock, precious metals, or digital assets like cryptocurrency. But with that flexibility comes harder due diligence and stricter rules.
To hold crypto inside an IRA, you must choose a custodian that explicitly allows digital assets. Many traditional brokers do not. Also, you must ensure compliance with IRS rules: for instance, you may not personally control the wallet keys, as that breaks custodial control rules. Violating those rules can disqualify the entire account.
Given that, the question becomes: should your crypto go into the same self-directed IRA as your traditional assets? Or should you create a dedicated crypto IRA that sits alongside? The guide “One Account or Two? How a Crypto-Enabled IRA Fits Alongside a Traditional IRA” explores these trade-offs in detail and helps you choose wisely.
One risk of a combined account is cross-contamination: a crypto loss might distract you from managing your core assets. Conversely, a second account adds paperwork, additional custodial fees, and complicates your tax filings. If your custodian supports hybrid assets, one account might suffice. If not, separate IRAs may be forced.
Another consideration: valuations and tax reporting. Digital assets require fair market valuation, which must be documented. Having them in a separate account may ease auditing and bookkeeping. The linked guide lays out best practices for allocation, rebalancing, exit triggers, and audit readiness.
In sum, self-directed IRAs open doors to new asset classes, but bring both power and complexity. Whether you consolidate everything or split into two accounts depends on your risk tolerance, custodian choice, and behavior. To build a thoughtful structure, see “One Account or Two? How a Crypto-Enabled IRA Fits Alongside a Traditional IRA”.