A Cryptocurrency IRA Anyone?

[The following in not financial advice]

One of the things I find really exciting about cryptocurrencies is the lopsided risk to reward ratio where a small investment has the potential to yield outsized gains—outsized tax-deferred gains if placed in a your IRA! Also, cryptocurrencies may be uncorrelated with other assets you hold, which can help make your portfolio less risky. In 2014 the IRS came out with guidance stating that cryptocurrencies are treated as property and could be held in an IRA— great news for investors!

Please be aware that every person needs to do her or his own due diligence with crypto IRA’s as with any investment! 

To begin with there are only a few ways to hold crypto in your IRA:

  1. Greyscale Bitcoin Investment Trust (OTC:GBTC)—You can buy this in your IRA from your brokerage account, just like you would if you were buying stocks. It’s easy to buy, but it may be cheaper to buy bitcoin outright as the fee is 2% and your share in the trust may not be commensurate with the amount of bitcoin you would own. In other words, the premium can be well above the net asset value of the bitcoin. At the most recent meeting of the Hampton Roads Cryptoasset Networking Group this past Thursday, Mike Wade talked about this premium and suggested that arbitrage opportunities may possibly exist.
  2.  A self-directed IRA (SDIRA) with an IRS qualified trustee or custodian. A SDIRA allows you to hold alternative assets in your IRA like real estate, gold coins or bullion, Perth Mint certificates, tax liens and even race horses. The key is to work with a custodian that has the capacity to custody the assets you want. Now that cryptocurrencies can be added to that list, the same holds true. Many custodians don’t have the understanding or capacity to hold cryptocurrencies like bitcoin so they partner with other companies who provide full service solutions. Companies like Bitcoin IRA, and Regal Assets, along with many others, act as the bridge connecting the investor and the custodian and place trades on behalf of the investor. They also secure the assets in a wallet. For example, Bitcoin IRA and Regal Assets both use Bitgo, a multi-signature wallet with 3 keys in cold storage and offer $1M per account insurance for protection against internal theft and fraud. 
    Because holding crypto-currencies in your IRA is relatively new, margins are high and fees are egregious. How egregious? Try an initial fee between 10%-15% of assets depending on your level of investment. The minimum investment for Bitcoin IRA is $25K and Regal Assets is $10K. Keep in mind that this is not the only fee; there are fees when you buy and fees when you sell and the custodian also charges holding and asset fees. For example, one custodian I am familiar with, Kingdom Trust, charges $240/yr ($20/month) and .07% of assets per month.
    This done-for-you approach does provide a greater level of hands–on service and security, but for the price of less control and higher fees.
  3. An IRA LLC aka a “checkbook IRA”. An IRA LLC is where your IRA owns only one asset—the LLC—and the LLC owns the assets. You, the investor, are the manager of the LLC and can invest in assets on behalf of the LLC for benefit of your IRA. The idea is that you can write a check for the assets you want to purchase. Keep in mind that this still requires a custodian and it is still up to the custodian as to which assets or cryptocurrencies they are willing and able to custody. The key is to find a custodian that charges a flat annual fee only and not a percentage of assets plus other fees. A company called Broad Financial offers this service. 
    In this situation, you are in control—control of what you purchase, how to store it and how to secure your keys—you are responsible for all of it. Once your LLC is created, you are responsible for opening up a bank account in the name of your LLC, opening up an account at an exchange also in your LLC’s name and transferring assets and funding your account, and reporting your yearly balances to your custodian.

Ultimately if you decide to open a cryptocurrency IRA, it’s up to you to decide which way to go—full-service or self-service, but with all the developments in this space, a little crypto currency in your account could go a long way!

CryptoCoinCon – Crypto Street Podcast

SEVAITS presents coverage from CryptoCoinCon 2018: The Crypto Street Podcast is made up of 3 twenty-somethings who go by the name Killer Whale, Prince, and CryptoDale. Their show has quickly become one of the most influential in the crypto-verse.

CryptoCoinCon – Daniel Keller

Up next from from CryptoCoinCon 2018 is Daniel Keller, who has over two decades with some of the largest healthcare technology companies. Dan walks through his roles as executive and adviser for several crypto related projects, including Windfall Mining, which rents, sells and manages  speculative mining equipment, and Black River Crypto, which is a venture fund.

CryptoCoinCon – Charlie “Mav” Severson

We start our presentation of content from the CryptoCoinCon event on August 18th in King of Prussia, Pennsylvania, with the opening talk from Charlie “Mav” Severson, host of ReadySetCrypto. Mav’s presentation kicked off the event and serves as a good intro for newbies as well as a refresher about the promise of cryptoasset technology. Enjoy!

Launching Podcast and Video Channels

Don’t forget to subscribe!

We are excited to announce that we are launching new podcast and video channels on YouTube and Bit.Tube. This first episode is just a short introduction about SEVAITS. Upcoming episodes will feature content from our trip to CryptoCoinCon last weekend, and we will be bringing more features from upcoming events and interviews. Thanks for checking it out!

[Update: we are in the process of submitting the pod to the major aggregators like iTunes and Google Play. In the meantime, you can manually add the show feed with this url: http://sevaits.com/feed/podcast/.]

Hitting the Road

We’re gearing up for CryptoCoinCon this weekend in Valley Forge, PA, and since we’re overdue for an update I wanted to get a post out before we head out.

As they say, everyone is a genius in a bull market, and this bear market has given us ample opportunity to focus on the tech. We’ve (temporarily) ceased active trading, setup passive income growth with a masternode, and been actively building community with a small coin fork to hone our development chops.

Trading

We’ve refrained from all trading the last two months. After failing to hold to our 2% risk management rule with our holdings on IDEX (AURA and SEN), we decided that it wouldn’t be appropriate to continue until these open positions returned to profitability. We did have a nice gain on ZRX that closed in early July, but were offset by a stopped-out position in BNB.

Masternodes

We setup our first masternode (MN) in early July, finally picking XDNA after several weeks of research. We gave a presentation on MN at the July Blockheads meetup, and we’ll expand the discussion on the experience at a later date. 

SpecMining

Measured in USD, our mining portfolio for July and August so far hasn’t quite made up for June, but the last 90 days have been profitable, BTC-wise. 

PennyKoin (PK) is going to get a full write up here at some point, a lot of our attention has been on this one over the last month or so. For now we’ll say that it’s a CryptoNote fork run by a solo developer, and we’ve now functioning as one of the core devs/community leaders. We’ve setup a mining pool and block explorer, and have even contributed to the project’s Github. It’s also inspired a related software development project that has income potential, and we’ve learned so much about blockchains while debugging the code. 

We also spent a couple weeks mining TUBE, the token for BitTube, a decentralized YouTube clone that looks really interesting, but we’ve since switched back over to our profit-switching pool of choice, MiningPoolHub