As blockchain technology continues blazing a path toward widespread adoption, many knowledgeable investors are diversifying their retirement savings with cryptocurrency holdings. When setting up a digital IRA (as such accounts are called), it helps to partner with a specialized company to navigate this process.
A digital IRA, or cryptocurrency IRA, is a self-directed IRA (SDIRA) that allows you to invest in a variety of cryptocurrencies and other asset classes in a single retirement account.
If you’ve been researching digital IRA service providers, you may have encountered two such “giants” in the industry: BitIRA and Bitcoin IRA. Bitcoin IRA was first to market in 2015. Since then, other companies have begun offering digital IRA services that provide a variety of different advantages. BitIRA launched in 2017 and made a name for itself by offering security innovations never before seen in the industry. For full disclosure, this article is written on behalf of BitIRA.
Let’s look at the four most important aspects of digital IRA service providers and see how these two stack up.
Digital IRA Comparison Factors:
- Asset Management
- Compliance and Transparency
- Insurance Coverage
Although bitcoin and other such coins are called digital currency, they are stored in what is called a cryptocurrency wallet. Just like losing your pocket wallet, if for some reason you lose access to your cryptocurrency wallet, then there is a high chance that you won’t be able to recover your savings. You can see how important it is, then, that the company you choose as your digital IRA partner has a process in place to protect your cryptocurrency wealth.
Both BitIRA and Bitcoin IRA offer what is called a multi-signature wallet, which ensures that any one person can’t gain access to your crypto wallet. Such a wallet requires that multiple trusted parties (i.e., you and your IRA custodian) enter their digital signatures before accessing your digital IRA. Review the processes of any digital IRA service provider to make sure they include this security measure.
Wallets can be “hot” or “cold.” Hot wallets are connected to the Internet for making transactions. Cold wallets are not online, rendering them immune to hacking and digital theft. Both Bitcoin IRA and BitIRA rely on cold storage to help secure your cryptocurrency assets.
The final critical element in cryptocurrency wallet security is your keys’ physical storage (think of “keys” as the routing and account numbers from your checking account plus your ATM PIN). Even if wallets are isolated from hacking attempts via the internet, there is still the possible danger (unlikely as it may be) of a thief physically breaking in and stealing keys or devices from a financial institution. As of 2/12/2021, Bitcoin IRA’s website states they store cold wallets in a Class III vault. BitIRA goes one step further, and relies on a Grade V nuclear bunker with physical 24/7 monitoring by specialists. (While this may seem like overkill, it’s important to note that hedge funds, crypto brokerages, and crypto exchanges also use Grade V bunkers for their own cold storage vaults.)
Both BitIRA and Bitcoin IRA partner with companies that specialize in cryptocurrency wallets. The wallet company that Bitcoin IRA currently partners with is called BitGo, which was famously implicated in the Bitfinex hack of 2016. Some contend that hackers were able to access the multi-signature security keys held by BitGo and Bitfinex, which led to cryptocurrency worth $72 million (at the time) being stolen. As of June 2021, the value of that currency would be around $5 billion.
When reviewing and choosing a digital IRA partner, selecting one that has a solid track record of security will reduce the probability of theft, headaches, and complaints in the future.
Security isn’t the only consideration when choosing a digital IRA partner. The way IRAs are designed mandates that a custodian must manage them on behalf of the customer (though as the customer, you always have full control over the asset classes in your IRA). Both BitIRA and Bitcoin IRA (at the time of this review) use what are called qualified custodians and not 3rd-party administrators, as used by some other companies.
Much depends on how a digital IRA service provider and their custodian structure their management of your cryptocurrency assets.
Bitcoin IRA’s custodian is Digital Trust Company (as of June 2022). BitIRA has chosen to work with Equity Trust Company, who has specialized in IRA custodianship for over a decade.
Bitcoin IRA and BitIRA’s custodial offerings are basically comparable. Since there’s no significant benefit in comparing them in greater detail, we’ll focus on more substantive comparisons.
Compliance and Transparency
Cryptocurrency is a relatively new innovation, and it has been shown numerous times in recent years that trust is an essential component between customer and currency management company. One of the ways digital IRA companies (not just BitIRA and Bitcoin IRA, as in this review) exhibit this trust is by their willingness to be compliant with standards and transparent to regulators and their customers. Not all companies in this space meet these expectations.
The CryptoCurrency Security Standard (CCSS) is a security standard created by the Cryptocurrency Certification Consortium “that helps secure all information systems that make use of cryptocurrencies” and is a security benchmark in the industry. BitIRA’s digital IRA processes are compliant with CCSS Level 2 standards.
To the customer, both standards offer approximately the same level of transparency.
In 2017, BitIRA was the first company in the digital IRA space to take the proactive step of registering with the U.S. Department of Treasury as a Money Services Business (MSB). This showed a commitment of transparency in their practices to both their customers and also to government regulators (who have the ultimate say on how cryptocurrency can be managed in an IRA). Furthermore, BitIRA’s exchange is regulated by both the SEC and FINRA. BitIRA also voluntarily registered with FinCEN, and submitted itself to the stringent guidelines that FinCEN set for institutions that deal with the transmission of money.
One year later, Bitcoin IRA followed suit and registered as an MSB as well.
The last major facet to consider in deciding between Bitcoin IRA and BitIRA is insurance coverage. Even if you know your assets are properly secured and managed, prudence dictates that for something as important as a retirement account, you want to protect your savings from unforeseen dangers. The solutions from both Bitcoin IRA and BitIRA offer insurance for your digital currency retirement savings. However, it’s important to note that each company’s insurance does not cover the same things.
Bitcoin IRA reports $100 million in custody insurance. That sounds ample — until we consider that Bitcoin IRA also claims $500 million in customers’ digital assets. What would happen if a black swan-type disaster struck Bitcoin IRA’s vault and emptied it? If the numbers above are correct, Bitcoin IRA’s customers would receive twenty cents of reimbursement for every dollar lost. Furthermore, there have been reports of Bitcoin IRA’s exchange BitGo “exaggerating insurance coverage.”
Perhaps that’s why Bitcoin IRA also reports a $1 million insurance policy “that covers consumers on the transactional side from any internal cases of fraud or theft.”
BitIRA is the leader of end-to-end insurance on cryptocurrency assets, which means that everything from theft, fraud, mistakes, to hacking are covered from the transaction phase and through the entire storage stage itself (usually by far the longest step in the digital IRA process). Genesis Storage maintains end-to-end insurance policies with $100 million coverage are in place across a reputable panel of London insurance companies with S&P ratings of A or better, all of whom have knowledge and experience of underwriting digital asset insurance products. Genesis Storage is the solution of choice for heavyweight institutional investors and hedge funds. That’s why Genesis offers the best insurance we could find, at any price. Should a black swan event empty BitIRA’s grade 5 nuclear vaults, customers’ losses will be insured.
Bitcoin IRA and BitIRA are both well-known names in the digital IRA space. This article is written on behalf of BitIRA, but we believe for the reasons listed above that BitIRA’s offerings go a step or more beyond the services of Bitcoin IRA. In the four key aspects considered in this review of Bitcoin IRA and BitIRA — security, asset management, compliance/transparency, and insurance — we believe that anyone conducting a dispassionate comparison of the two companies will find that BitIRA offers customer advantages that are unique in the industry.
While Bitcoin IRA was first to market, that’s not always an indicator of first-rate quality. MySpace and Friendster were also first but are now largely relics of the past – now, people have moved on to the likes of Facebook, Instagram, and TikTok. Innovation and customer focus have always been cornerstones of success in any services industry, and the digital IRA space is no exception.
To learn more about BitIRA, review your options, and talk to a Digital Currency IRA Specialist, download this free guide to Digital IRAs today!
Disclaimer: BitIRA is not affiliated with Bitcoin IRA in any way. Bitcoin IRA owns all rights to its own name, trademarks, and intellectual property.
|Grade V Nuclear Bunkers|
|Grade III Military Vault|
|Security rating||CCSS Level 2||SOC 2 Type II|
Digital Wallet Provider Never Hacked
|Never Hacked||BitGo Hacked in 2016|
|$100M||$100M for over $500M in assets. Approx. $0.20 per dollar|
|$100M||Yes, with limits|
|Settlement for liquidation||Next-day||Unknown|
|Registered with FinCEN||✓|
BitIRA was the first to register
|Custody||Genesis Storage||Bitgo Trust|