Is there an IRA for crypto? A clear guide to fidelity crypto ira and other options
FinancePolice aims to help everyday readers understand the decision factors and ask the right questions, not to recommend a specific provider. Use this guide as a starting point and verify provider terms and tax implications with primary sources.
What people mean by a “crypto IRA” and the legal context
A crypto IRA is a plain phrase people use to describe an Individual Retirement Account that holds cryptocurrency through a custodian that supports digital assets. The term itself does not create a new type of IRA; it describes an ordinary traditional or Roth IRA that contains crypto assets inside the account.
Under current U.S. tax guidance, virtual currency held inside an IRA is treated as property and remains subject to the same tax and prohibited-transaction rules that apply to other IRA assets, so basic IRA tax rules still govern distributions and required minimum distributions as applicable IRS guidance on virtual currency.
Prepare questions before you contact a custodian
Read on to understand custody options, rollover steps, and the verification steps to take before you move retirement funds.
People asking “can I hold cryptocurrency in an IRA?” should start with the IRS position and then compare custodians, because the retirement account retains ordinary IRA tax treatment even when it holds crypto.
How the IRS tax and prohibited-transaction rules affect crypto inside an IRA
Trading or selling cryptocurrency within an IRA does not create a taxable capital gain for the account owner at the account level; tax consequences generally arise when funds leave the IRA as a distribution or a nonqualified withdrawal. This distinction matters because active trading inside the tax-advantaged account does not trigger taxable events in the same way taxable accounts do IRS guidance on virtual currency.
The IRS also makes clear that virtual currency is property, and ordinary IRA rules such as prohibited-transaction rules and self-dealing restrictions still apply. Practically, that means you should avoid transactions that could be treated as benefiting a disqualified person and consult the custodian if you are unsure whether an unusual transaction could be problematic.
Custody models: how providers store crypto for IRAs
Providers use two common custody models for holding crypto in retirement accounts. One model is custodian-hosted custody where the IRA custodian itself controls the private keys and holds the assets. The other is an arrangement where the custodian uses a third-party crypto custodian or a trust company to store assets and manage keys.
These models differ in operational control, the practical ability to transact on-chain, and how fees and disclosures are structured. Some arrangements let the account holder trade through the custodian’s platform while others constrain activity to custodial transfers overseen by the trustee FINRA guidance on crypto assets.
No. A "crypto IRA" refers to an ordinary IRA that holds cryptocurrency through a custodian that supports digital assets; tax rules and prohibited-transaction provisions for IRAs still apply.
When comparing providers, ask whether the custodian itself holds keys or a separate trust company does, and how that choice affects transaction timing and liability in case of a security incident.
Provider differences and what to watch for when a custodian offers crypto IRAs
Not every custodian that offers retirement accounts supports crypto, and among those that do you will see variation in eligibility, state availability, and which assets are accepted. Verify whether your state is supported and whether your account type is eligible before initiating a transfer or rollover Fidelity’s crypto information and disclosures.
When you contact providers, request written details about custody model, how distributions are handled for crypto assets, whether they accept trustee-to-trustee rollovers from 401(k) plans, and exact fee schedules. These operational questions reveal limits that can affect timing and taxes.
What Fidelity offers for retirement accounts and crypto custody
Fidelity has announced retirement-account access to certain cryptocurrencies through services such as Fidelity Digital Assets or related custody offerings. Those programs are designed to let eligible retirement-account holders hold digital assets within an IRA structure, subject to eligibility and state availability Fidelity’s crypto information and disclosures.
Provider disclosures from Fidelity note that not all accounts or states may be supported and that asset lists, fees, and rollover policies can vary. Before moving funds, confirm which specific crypto assets are supported and whether your existing account type can be linked to the crypto custody service.
Fidelity crypto IRA
For readers comparing mainstream firms, understanding how Fidelity integrates custody and retirement accounting can illustrate one mainstream model, but terms and state availability are specific to the offering and can change over time, so verify details directly with the provider. For more background see the crypto category on our site for related articles.
Rollovers, transfers, and setting up a crypto-capable IRA
Rolling over a 401(k) or traditional IRA into a crypto-capable IRA is feasible, but it requires the receiving custodian to accept rollovers and for you to follow trustee-to-trustee rollover rules carefully to avoid inadvertent taxable distributions. Confirm acceptance and timing with both custodians before moving funds Tax Foundation guide on crypto IRAs.
A practical rollover sequence typically looks like this: confirm the target custodian accepts rollovers and the assets you plan to hold, open the new account, request a trustee-to-trustee transfer, and get written confirmations of each step. If you take custody of funds personally during the process, you may trigger a taxable distribution.
Key risks and regulatory warnings for crypto IRAs
Regulators and investor-protection organizations highlight custody and security risk, limited deposit insurance for crypto holdings, evolving regulatory expectations, and sometimes higher fees compared with mainstream IRAs. These are recurring cautions across regulatory guidance and industry commentary FINRA guidance on crypto assets. You can also review a CFTC advisory that warns about misleading claims related to IRAs and digital assets.
Compare custody and fee disclosures across providers
Request written confirmations
Many crypto holdings are not covered by FDIC or SIPC protections in the way bank deposits or certain brokerage assets can be, so ask providers whether they have separate insurance, bonding, or third-party coverage for custodial losses and what specific scenarios are covered SEC bulletin on digital asset custody.
Regulatory expectations can change, and future rulemaking could affect custody requirements, reporting, or the structure of custody arrangements. Keep an eye on official announcements and look for clear, written disclosures from any custodian before you move retirement funds.
Decision checklist: is a crypto IRA right for your retirement plan?
Ask yourself basic personal finance questions before you proceed: what is your time horizon, how high is your risk tolerance, what share of retirement savings would be allocated to crypto, and do you understand custody tradeoffs and fees? These considerations help you decide whether to investigate further.
Red flags that suggest caution include unclear custody arrangements, unusually high or opaque fees, lack of state eligibility disclosures, or custodians that will not provide written confirmations of rollover or custody terms. When in doubt, consult a tax professional before moving funds IRS guidance on virtual currency. Also see the Finance Police homepage for related resources: FinancePolice.
Step-by-step: opening and funding a crypto-capable IRA
Start by comparing providers on custody model, fees, eligible assets, and state availability. Request written fee schedules and ask how distributions are processed for crypto assets, since that can affect timing and tax reporting Tax Foundation guide on crypto IRAs.
Then open the account with the chosen custodian, initiate a trustee-to-trustee rollover or transfer, confirm the receiving custodian accepts the assets, and keep documentation of each confirmation. If on-chain setup or multi-signature arrangements are required, verify the steps with the custodian so you understand how custody and access will work in practice.
Common mistakes and how to avoid them
A common error is treating a rollover like a personal withdrawal. Taking possession of rollover proceeds can convert the transfer into a taxable distribution, so use trustee-to-trustee transfers and insist on written confirmations to avoid surprises Fidelity’s crypto information and disclosures.
Another frequent misunderstanding is assuming FDIC or SIPC protections apply to crypto holdings. Those protections generally do not cover crypto in the same way as bank deposits or certain brokerage assets, so verify any insurance or bonding the custodian says it carries.
Fees, insurance, and consumer protections to compare
Typical fee components to compare include custody fees, trading or execution fees for crypto transactions, asset servicing or administration fees, and any platform charges unique to crypto custody. Fee structures can vary widely between providers, so ask for a detailed fee schedule in writing FINRA guidance on crypto assets.
Insurance or bonding arrangements differ by provider. Some custodians purchase third-party insurance for stored private keys; others rely on contractual protections or limited bonding. Confirm exactly what is covered, coverage limits, and any exclusions before you move funds.
Practical scenarios: sample reader situations and possible approaches
If you are considering a small allocation for a long time horizon, you might keep most savings in diversified, lower-cost vehicles and allocate a modest percentage to crypto inside an IRA while verifying custody, fees, and tax reporting. This approach treats crypto as an experimental or high-risk sleeve of a broader retirement plan Tax Foundation guide on crypto IRAs.
If you plan to rollover a 401(k) to access crypto options, follow the trustee-to-trustee transfer steps described earlier and confirm asset acceptance and timing with both custodians to avoid taxable events. Avoid using near-term or emergency retirement funds for volatile crypto holdings.
Monitoring, reporting, and year-end tax considerations
Keep records of rollovers, custodian confirmations, and account statements that show transactions inside the IRA. Good documentation helps if the IRS questions a rollover or the tax treatment of a distribution, because the agency treats virtual currency as property for tax purposes IRS guidance on virtual currency. For additional IRS materials see Digital assets | Internal Revenue Service.
If the custodian’s reporting is unclear or your situation is complex, consult a tax professional. A tax advisor can help interpret account statements, confirm reporting obligations for distributions, and advise on how rollover timing or account activity may affect taxes.
Bottom line and next steps: a safe approach to exploring crypto in IRAs
Crypto can be held in IRAs through custodians that support digital assets, but the account remains an ordinary IRA for tax purposes and is governed by standard IRA rules and prohibited-transaction provisions IRS guidance on virtual currency.
Key risks to weigh include custody and security exposure, limited deposit protections compared with bank accounts, evolving regulatory expectations, and generally higher fees. If you decide to proceed, compare providers, confirm custody and fees in writing, use trustee-to-trustee rollovers, and consult a tax professional when questions arise.
Yes. You can hold cryptocurrency inside a traditional or Roth IRA if you use a custodian that supports digital assets, but the account remains an ordinary IRA for tax purposes.
Generally no. Most crypto holdings lack FDIC or SIPC coverage, so confirm any insurance or bonding the custodian provides and read disclosures carefully.
No, trades inside the IRA do not create taxable capital gains at the account level; taxes typically apply when you take distributions from the IRA.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.