Could tax-free Bitcoin be one of 2020’s hottest trends?

A company that allows consumers to invest in Bitcoin on a tax-free basis says it has seen demand surge in recent months.

iTrustCapital allows Americans to gain exposure to the world’s biggest cryptocurrency through a self-directed individual retirement account, otherwise known as an IRA. These vehicles allow owners to get involved in a diverse array of alternative investments, such as digital assets, precious metals and real estate.

According to the trading platform, increasing numbers of investors have been moving their current retirement accounts out of traditional financial institutions that usually only offer stocks and bonds. Interest in cryptocurrencies has been buoyed by a number of high-profile advertising campaigns of late, and some have started to view Bitcoin as a safe haven against inflation and mass sell-offs in the equities market.

There’s also another factor at play: the Internal Revenue Service’s determination to clamp down on cryptocurrencies. iTrustCapital says the message is clear: “There is no excuse for investors to not track, report and pay taxes on every single crypto transaction unless it’s in a tax-free, self-directed IRA.”

Anthony Bertolino, the company’s director of customer experience, explained: “Buying and selling in an iTrustCapital account feels very similar to using Coinbase. You simply log in and trade in just three clicks. What separates us apart is that our users don’t have to worry about taxes because our accounts are IRAs.”

Crypto doesn’t have to be taxing

iTrustCapital believes that tax-free options will only become more popular as increasing numbers of investors begin to explore what the likes of Bitcoin have to offer. The company says this approach delivers comparable advantages to investing in crypto normally but without as much hassle. To reduce the barriers to entry even further, the company also gives its clients institutional wallet custody and security through Curv — a business that “sets the standard for digital asset security.”

Announcing the partnership back in July 2019, iTrustCapital CEO Todd Southwick said: “We chose Curv because securing our clients’ funds is paramount. By eliminating the private key from the transaction entirely and relying on math instead of hardware, we ensure that no person or piece of software can make a transaction on its own.”

Given how self-directed IRAs are used to prepare for retirement, peace of mind is paramount. To this end, investors also get access to a $50-million insurance policy through Munich Re — an S&P AA-rated international insurance company.

Good news for the sector?

Bitcoin is especially popular among millennials, and substantial inflows of capital are expected in the coming years. According to iTrustCapital, the tax-free model it offers will help increase this even further. Tim Shaler, an economist who advises the firm, said: “We predict technology like blockchain and digital assets will create a new segment that, in addition to access to retirement capital, will inspire new uses for tax-advantaged accounts. We expect to see $1.5 trillion of capital moving into this new asset class within five to seven years.”

Although there are a number of IRA providers that unlock access to crypto for investors, the company says it’s important for interested consumers to perform as much research as possible into the fees that these providers charge. In a recent blog post, Blake Skadron, the chief operating officer of iTrustCapital, wrote: “My number one red flag when researching any product or service is whether or not they clearly display their pricing and fees upfront. If you have to speak to someone to find out what it will cost you, the odds are you will pay too much.”