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Self-Directed IRA Cryptocurrency: What You Can Hold

A self-directed IRA may hold cryptocurrency if its custodian permits it. The IRS treats it as property for tax purposes.

Vahe HakobyanEditor-in-chief Updated Oct 5, 20263 min readFact-checked

Illustration: World-Crypt

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What Is a Self-Directed Crypto IRA?How Does Crypto IRA Custody Work?What IRS Rules Apply to Crypto IRAs?How Is It Different From a Regular IRA?What Limits Should Beginners Know?FAQ

Key takeaways

Any IRA type, including Roth, can be self-directed.
Most mainstream IRA providers do not permit cryptocurrency.
Prohibited transaction rules bar buying IRA crypto from yourself.

Short answer

A self-directed IRA is an IRA that may hold cryptocurrency as an alternative asset. The coins must stay with a qualified custodian, not your wallet.

A self-directed IRA is an IRA that may hold alternative assets. You choose from the investments the custodian permits, and Bitcoin settles on a public ledger such as the Bitcoin blockchain.

What Is a Self-Directed Crypto IRA?

Self-directed crypto IRA at a glance

What it is: IRA that allows alternative investments
Types: Traditional, Roth, SEP and SIMPLE
Bitcoin is: Classified as commodities
Not the same as: Solo 401(k)

A self-directed IRA is an IRA that may hold crypto as an alternative asset. Any IRA type, including Roth, SEP and SIMPLE, can use this structure. It permits a wider selection of investments that IRAs may hold.

How Does Crypto IRA Custody Work?

Most mainstream IRA providers do not permit cryptocurrency. You need a custodian that allows it, because IRA assets must sit with a qualified trustee or custodian, not with you.

Custody checks

Confirm the custodian permits crypto.
Check the IRA is owner of record.
Keep your wallet separate.

What IRS Rules Apply to Crypto IRAs?

Prohibited transaction rules bar you from buying IRA crypto from yourself or using it personally. The IRS treats IRA crypto as property for tax purposes.

How Is It Different From a Regular IRA?

A regular IRA usually cannot hold crypto because its provider does not offer it. A self-directed IRA may hold crypto if the custodian permits it.

Regular IRA vs. self-directed IRA
Regular IRA	Self-directed IRA
Crypto: usually not offered	Crypto: may be allowed
Custodian: mainstream	Custodian: specialized

What Limits Should Beginners Know?

Custodians often limit which coins you can hold, and some do not permit staking. The SEC has warned of a higher fraud risk with alternative assets in self-directed IRAs.

Limited coin menus
Higher account fees
Staking restrictions

Frequently asked questions

Yes, if the custodian permits crypto. The same custody and prohibited transaction rules apply.

You generally cannot transfer crypto you own into an IRA. You would sell it outside, contribute cash, and let the IRA buy crypto.

You receive the crypto personally. A traditional IRA distribution is generally taxed as ordinary income.

It can create tax complications. Some tax professionals treat staking rewards in an IRA as unrelated business taxable income.

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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.