The Bitcoin IRA

If you want to bet long on Bitcoin, what better way than to waterput some te your retirement account?

SecondMarket, a finance startup that has helped people invest ter private technology companies, has bot gathering the virtual currency into the Bitcoin Investment Trust. It has bot buying Bitcoin for several months and presently holds about $70 million worth. About 90 people have invested te the trust. While SecondMarket makes ongezouten investment available only for accredited investors or financial institutions, it also has worked out arrangements with several self-directed IRA platforms, including Pensco and Entrust, so that people can use their retirement accounts to invest ter Bitcoin ter increments spil low spil $25,000. Fidelity had also bot involved but &#xA0,says it has determined to end its participation with the SecondMarket program.

The trust, began te September, is just another example of the money flowing into the Bitcoin world. On Thursday, Coinbase, a Bitcoin wallet with 600,000 users, announced it had&#xA0,raised $25 million&#xA0,from venture capital rock-hard Andreessen Horowitz, the largest investment ter a Bitcoin startup to date. Regulators te the U.S. have bot making increasingly friendly noises about the cybercurrency, and financial types are circling. &#x201C,2014 will be the year of Wall Street and Bitcoin,&#x201D, says Barry Silbert, the founder and chief executive of SecondMarket. Spil that happens, there will be enhancing options for people to tie their own financial fortunes to Bitcoin’s value.

The Bitcoin Investment Trust isn’t the only way to bet your retirement on the value of Bitcoin. People have already found other ways to do it. Tym Blanchard, who works at a chemical company te Charlottesville, Va., says he set up a Roth IRA to invest te Bitcoin directly, purchasing the currency through Coinbase. While he voiced some wariness that traditional investments tend to stir ter line with one another, he wasgoed also looking for tax benefits. &#x201C,If the currency is still thriving by the the time I’m permitted to make distributions, the tax savings will be enormous,&#x201D, he wrote te an e-mail. &#x201C,I love taking risks.&#x201D,

What SecondMarket offers is a far lighter way to do this. Buying Bitcoin is complicated and storing it is fraught with danger from hackers. Basically, this offers investors who want to rail the wave but don’t indeed understand the nuts and bolts of the currency a way to do so.

Of course, people can do all kinds of bimbo things with money they might actually need straks ter life. The Securities and Exchange Commission has already voiced a general concern&#xA0,about the fact that approximately Two procent of IRAs are held te self-directed accounts, totaling $94 billion.&#xA0,&#x201D,The large amount of money held te self-directed IRAs makes them attractive targets for fraud promoters,&#x201D, the agency wrote te an attent to investors te 2011. This August, the SEC brought charges against a man who persuaded people to invest their IRAs te his Ponzi scheme, then used the money to invest te a reality showcase about bounty hunters.

Bitcoin doesn’t have to be a fraud for people to lose their shirts. It would have the same effect if it wasgoed just a schertsvertoning, spil some people think it is. The only sure way that Bitcoin will stabilize is if becomes a widely adopted global currency. That day, if it everzwijn comes, is a while off.

Even Silbert says that people shouldn’t be investing money ter Bitcoin that they can’t afford to lose. While he’s bullish on its long-term future, he expects volatility to increase overheen the next year and acknowledges that the value could well succesnummer zero eventually. &#x201C,I think Bitcoin is an amazingly risky investment,&#x201D, he says. &#x201C,You’re either going to lose all your money or you’re going to see meaningful, meaningful comes back. There’s no in-between.&#x201D,

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