Bitcoin IRA, a digital assets company that helps people add cryptocurrency to their retirement portfolios and 401K’s, has officially launched a self-directed IRA, as per a press release, June 25, 2019.
Digital Assets in Pension
The rules of the offering are similar to a regular IRA; a customer has sole authority as to what goes in their portfolio by directing the company on what to hold for them. The only difference is that the underlying assets aren’t stocks and bonds – they’re cryptocurrencies.
Bitcoin IRA, which launched three years ago, has processed over $350 million in transactions, as per the press release issued by the company. By registering as an administrator with BitGo, a division of the company will execute all administrative tasks from plan execution to KYC/AML and transaction monitoring.
BitGo is the largest custodial service for digital assets in the world and will offer a wealth of incentives to those who invest through Bitcoin IRA. BitGo’s state of the art services allow for a 30 percent reduction in wallet fees and the ability to allow customers the opportunity to invest in 12 different digital assets. BitGo has a cold storage vault located in South Dakota that exceeds regulators demands in terms of security. Bitcoin IRA will have a $100 million insurance policy to back the assets held by its investors.
The process of opening an IRA with the firm is near instant, but KYC procedures usually take a day to go through. Bitcoin IRA has clients across the USA, with the exception of New York, as they do not have a BitLicense to operate in the jurisdiction.
Small Allocation, Huge Jump in Returns
Leading figures in the space such as Anthony Pompiliano have long been arguing for pension funds to open a small allocation to bitcoin. Having a heavy exposure to bitcoin isn’t recommended even for those who can bear surplus risk, but a small allocation in the 1-3 percent range would skew risk-adjusted returns for the portfolio.
In this case, assuming nil leverage, the maximum value that will be lost is 1-3 percent – if bitcoin goes to $0. On the contrary, bitcoin’s historical return profile has the ability to magnify long term returns. The 1-3 percent allocation could explain over 70-80 percent of the funds return during bitcoin’s boom cycle.
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