Asset diversification has long been touted as a
critical strategy for wealth building. This method of portfolio management,
which traditionally involves a mix of stocks, fixed assets and commodities
allows for maximum return at the least amount of risk — an important element
for retirement savings.
One company with a strong foothold in this
investment space is Equity
Trust, a financial services company that allows
individual investors to diversify their retirement investment portfolios
through asset class options like private equity, precious metals, tax liens and
real estate among others. With over $25 billion in assets under custody and
administration as of the end of 2017, Equity Trust’s self-directed retirement
accounts have become a viable option for entrepreneurial investors seeking
control over their wealth building activities.
Merging the Worlds of IRAs and Crypto
Equity Trust recently launched a new digital
asset platform that allows individual retirement
accounts (IRAs) to invest in cryptocurrencies. It can be simple to open an account
online through myEQUITY (its online account system), or investors can call and
open an account through a senior account executive.
The minimum investment required is $10,000 in
addition to a $500 nonrefundable fee for use of the digital asset platform.
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Through this platform, investors can purchase and
sell bitcoin, bitcoin cash, ether, ethereum classic, litecoin and XRP using a
trade-date-plus-one formula (i.e., next-day cash availability for sale
transactions). The industry-leading cycle starts when purchase/sell orders are
immediately filed by liquidity providers to lock in the price and exchange of
fiat and digital currency takes place the following morning.
Because Internal Revenue Service (IRS) guidelines
treat crypto in a manner similar to real estate, an IRA offers some potential
tax advantages. If IRS guidelines are followed, taxes are deferred, meaning
that there are no immediate tax implications. By way of example, the major spike
in bitcoin prices in 2017 led to some major financial returns for investors in
this space, but it also resulted in a significant tax impact. If these
investments had been made through an IRA, taxes could have possibly been
deferred through retirement.
This move on the part of Equity Trust to create a
digital currency platform signals demand on the part of clients and other
investors for tax-favorable investment vehicles like IRAs.
This pioneering platform brings ease of use to
the digital currency investment process through a simple online interface.
Here, both individual investors as well as institutional professionals who
represent clients are able to rapidly place digital currency orders using funds
The emergence of the digital asset platform reflects
the most recent in a series of technology investments made by Equity Trust.
Dave Allen, Equity Trust’s COO, said “it demonstrates the company’s aim to
invest in technologies that align with a broader strategic approach of
delivering innovative, world-class products and services that maximize client
value while accelerating client access to alternative investments.”
Equity Trust’s target market includes current
cryptocurrency investors desiring a long-term investment approach, where there
is the potential for wealth to be built over a number of years. Equity Trust’s platform
is also ideal for investors seeking a more diversified retirement portfolio who
may not have explored cryptocurrency in the past.
One of the prized features of the platform is the
ability to connect a client’s Equity Trust account with a “cold storage”
facility, allowing for a secure long-term storage approach for digital
currency. This feature significantly mitigates the customer risks often
associated with the investor holding their own cryptocurrency keys.
Allen indicated that a main factor that led the
company to pursue the intersection between IRAs and cryptocurrency was the
stated demand of Equity Trust’s existing clients.
“Equity Trust has specialized expertise in
providing responsible access to alternative asset classes, ” he said. “And with
cryptocurrency emerging as an asset that’s experiencing increased demand,
investors are desiring tax-advantaged retirement options to invest in
cryptocurrency. It made sense for Equity Trust to apply its expertise in this
area and deliver a solution.”
Note: Trading and investing
in digital assets is speculative and can be high risk. Based on the shifting
business and regulatory environment of such a new industry, this content should
not be considered investment or legal advice.