What Is a Bitcoin Custodian?
The IRS requires that all individual retirement accounts (IRAs) have either a custodian or trustee. The custodian can be a financial institution or nonbank entity approved by the IRS. As the overseer of your IRA, the custodian buys and sells assets for your account, maintains records of transactions, and files any necessary reports for tax or other purposes. Essentially, the government wants to help ensure that citizens’ life savings are managed responsibly.
For Self-Directed IRAs, some custodians specialize in specific types of assets, such as precious metals or cryptocurrency, to help investors navigate the process of transacting and storing such alternative investments. Having a custodian that specializes in cryptocurrency IRAs oversee your IRA may help keep your digital assets more secure. Such Digital IRA custodians may:
- Offer services to securely store crypto assets
- Insure digital assets against theft or other types of loss
- Ensure compliance with cryptocurrency storage security standards (SOC 2 Type 2)
When choosing a custodian for your crypto IRA, you may want to look for services such as the ones listed above. Keep in mind that there may be a delay of a few days for a custodian to process a cryptocurrency transaction in your IRA, though there is no financial penalty from the IRS for trading such assets back and forth in your IRA.
BitIRA’s custodian partner is Equity Trust Company.
Equity Trust Company
Equity Trust Company is a premier custodian specializing in alternative assets in tax advantaged portfolios. Since its inception in 1974, Equity Trust has simplified the investment process, offering investors optimized solutions, processes, and service.
The Equity Trust Process
Equity Trust Company tends to your custodial and administrative needs by providing the following.
- Investment Freedom – Investors have the ability to customize their portfolio to include both alternative and/or traditional investments. The platform also allows investors to gain new insights though its educational resources.
- Innovative Technology – Through the myEQUITY online account management system, investing is intuitive, allowing for investors to easily manage and engage with their account.
- Recognized Leader – With over 49 years of financial service experiences, Equity Trust is well known and has established solid relationships with over 150,000 investors, fostering custody over $39 billion in assets.
- Qualified Expert – Equity Trust is approved by the IRS and complies with all relevant IRS regulations regarding custody of digital assets. It is also SOC 1 certified.
- Service Excellence – Equity Trust Company has over 400 employees ready to assist investors with their custodial needs. In 2018, Equity Trust competed 1.2 million transactions.
Once your account is open, you’ll buy and sell cryptocurrencies through Galaxy Digital, our exchange partner (learn more about cryptocurrency exchanges).
Our exchange partner is Galaxy Digital, a publicly-traded company built for the web3 world that’s been in operation since 2018. They are now a leading provider of liquidity in the digital asset space.
- Trust and Transparency – As a publicly-traded, Galaxy is subject to higher standards than many private exchanges. It also holds itself to high standards through its commitment to transparency and compliance.
- Liquidity – Galaxy hosts an active marketplace with tight spreads that makes it easy and safe for customers to trade their digital assets without worry.
- Innovative Technology – As web3 experts, Galaxy’s platform is designed for a digital world. Their market-leading technology ensures little to no downtime.
Ledger Enterprise: Storage and Security Partner
Equity Trust and BitIRA work with Ledger Enterprise, a leading expert in digital asset storage and security. Equity Trust integrates with Ledger Vault’s multi-signature system which provides a comprehensive and layered approach to asset security. With this protocol, not only do customers have to provide their own personal authorization before any transaction can occur, but signatures will be required from multiple devices. This prevents having a single source of vulnerability, greatly improving the security of assets held in storage.
On top of this best-in-class approach to security, assets are also insured through multiple policies held by BitIRA’s partners. Together this provides end-to-end insurance coverage for our customers’ digital assets whether they’re being held in storage or are in transit.