Should You Use Your IRA to Invest in Bitcoin?
You may have noticed the plethora of companies promoting the use of IRAs to invest in bitcoins.
Whether that’s a good idea or not continues to be a matter of debate. Much of the conversation centers around whether cryptocurrencies are heading for a dot-com-like bust. Right now, their value is soaring wildly—as of Jan. 4, 2017, the value of one bitcoin was $14,983.80—but can it last?
What is certain is that you can use your IRA to invest in digital currency. But most experts agree that unless you are extremely well-educated about how the digital currency world works and are fully aware of the risks and potential pitfalls involved, it’s best to steer clear.
Tips When Researching the Topic
There are any number of articles available via the Internet about the subject, but keep these things in mind as you digest them:
- This is a complex topic and not all articles you read may be comprehensive. It probably will require piecing together information from a variety of sources to get a full picture.
- Many of the articles that come up in a Google search are from companies that may have a vested interest in convincing you of the suitability of one aspect versus another. Just maintain a healthy skepticism where the profit potential is concerned.
Laws are Constantly Changing
Laws and regulations are being added all the time, as new technology advances and business systems evolve.
In its Notice 2014-21, issued in 2014, the IRS labeled bitcoins “intangible property.” That means they are subject to capital gains tax rules.
And in mid-2017, the Securities and Exchange Commission issued a “Report of Investigation” relating to those who deal in cryptocurrencies. “In a nutshell,” writes securities attorney Kim Lisa Taylor, Esq., the SEC has deemed that “cryptocurrency tokens are Securities, and all issuers and exchangers of such tokens must comply with Securities laws or qualify for an exemption from registration. So, if you are contemplating an ICO, you need to seek guidance from a Securities attorney.”
Confused yet? Even if you think you know it all, you’re probably missing something. It’s ALWAYS best to seek the guidance of your own financial, legal or tax adviser who understands your particular situation and long-term investment goals.