Why bitcoin is a great retirement asset

While most individuals on the periphery observe bitcoin’s volatility and perceive it to be a highly speculative asset, bitcoin is actually the ultimate breakthrough in savings technology. Its fixed supply of 21 million sets it apart from all other currencies, investments, and savings vehicles. 

As conviction in the credibility of bitcoin’s fixed supply has grown, bitcoin’s value has increased by orders of magnitude and advocates are increasingly using bitcoin for long-term savings rather than merely as a speculative asset to trade (or day trade). This saving includes retirement assets, which have logically also begun to shift to bitcoin.

Historically, there have been limited options to allocate tax-advantaged savings to bitcoin. Most people to date have been forced into inferior investment products, such as Grayscale Bitcoin Investment Trust (GBTC) and some newer ETFs, principally because it is easy to do so in a standard retirement account at a brokerage firm. With those products, there is a trust that holds bitcoin, and individuals purchase shares of the trust. Experienced bitcoiners understand that this is a poor approach to holding bitcoin (maybe even the worst possible way): 

  • It introduces unnecessary layers of counterparty risk (at least four).
  • It is not possible to redeem shares in the trust for actual bitcoin.
  • The annual fees (up to 2%) are extreme given the severe limitations of the product.

Retirement savings you control

While holding retirement bitcoin on a direct basis through a deposit account with a third-party custodian would be an improvement, the most informed bitcoiners have begun to shift toward an approach involving control over private keys. The power of private key control means that you can eliminate counterparty risk while at the same time capitalizing on the benefits of tax-advantaged savings. 

There is no better way to save for the long-term than holding bitcoin in a tax-advantaged account while also having possession of your own private keys. It is the pinnacle of retirement savings, and it’s what we work to both enable and make easy at Unchained Capital.

While there will undoubtedly be a growing number of options to invest tax-advantaged retirement funds in bitcoin, none will match the value delivered through an Unchained IRA. Through this structure, Unchained clients can purchase bitcoin with tax-advantaged dollars while holding their own keys in collaborative custody and eliminating the counterparty risk of large financial institutions. For individuals that demand private key control, we expect to serve all of their needs, including retirement savings, which is why we’re investing in educational content while also delivering long-term retirement solutions.

A huge improvement on prior solutions

In the past, when clients wanted key control in the context of a retirement account, it required creating a confusing legal structure known as a self-directed “checkbook” IRA. Setup was a laborious process that required consultation with a lawyer and onboarding with several different institutions. However, with the release of Unchained IRA, the complexity caused by the checkbook IRA structure is no longer required.

Duplicating a familiar experience

In the context of a “traditional” brokerage, an IRA isn’t much different from any other brokerage account. The account has an “IRA” label on it so that the tax advantages are clear, but otherwise, clients interact with it just as they would any other brokerage account.

This seamlessness is the experience that Unchained is replicating for bitcoin. An Unchained IRA vault will sit alongside your personal vaults in your Unchained account. Other than having an “IRA” label on it (and the tax benefits it brings), it will look and feel like any other Unchained vault.

How it works

From the perspective of an Unchained client, an Unchained IRA will operate just like any other Unchained vault, except that deposits and withdrawals will work slightly differently due to an IRA’s tax advantages. Traditional, Roth, and SEP IRAs are all offered.

Concerning withdrawals, any movement of bitcoin out of the vault will be reported as an IRA distribution unless it is part of a prearranged “rollover” to another IRA provider. The tax consequences of an IRA distribution from an Unchained IRA are the same as the tax consequences of an IRA distribution from any other IRA and will depend on whether the IRA is a Traditional IRA or Roth IRA.

The only way to “deposit” into an Unchained IRA vault will be a rollover from a prior retirement account or an annual IRA contribution. Both of these deposit methods typically assume a deposit in US dollars. When those dollars are received, Unchained will convert them to Bitcoin automatically and deposit the Bitcoin proceeds into your IRA vault. This service is available to anyone with a US social security number or US ITIN, regardless of state of residence.

1. Create an account

If you would like help creating your account, request our concierge service for 1-to-1 guidance on setup.

2. Sign the agreement

Agree to the required legal structure. Unchained will handle all annual administration for you.

3. Build an IRA vault

Create a dedicated retirement vault in your new business account and set up your hardware wallets.

4. Initiate a rollover

Transfer your existing retirement assets or choose to make an annual IRA contribution.

Under the hood

The above is all a client needs to know to properly operate an Unchained IRA by Unchained Capital. However, if you are reading this article as an attorney or CPA and are curious about what is going on “under the hood” from a legal perspective, this section is for you. This background information is not something ordinary clients would ever need to have in mind on an everyday basis.

As required by Internal Revenue Code Section 408(a)(2), all Unchained IRAs have a licensed financial institution as IRA custodian. Unchained has selected Solera National Bank as its partner to fill this role. To ensure strict compliance with the statute, all IRA bitcoin are stored in a secure Unchained multisignature vault in which legal title vests to the IRA custodian.

Unchained clients typically demand the strictest security, however, and as such do not want Solera or any other third party holding a quorum of private keys. To address this concern, under a tri-party agreement with each individual Unchained client, Solera agrees to delegate private key holding. Two keys (a quorum in the Unchained 2-of-3 vault) are delegated to the client, with the third key delegated to Unchained. To comply with sections 408(a)(2), (h), and (i) of the Internal Revenue Code, as well as prevent constructive receipt of IRA assets that would potentially cause a loss of tax-advantaged status, the tri-party agreement makes clear three key points. First, all keyholders act in the role of conduit for the IRA custodian. Second, Unchained will monitor all IRA vaults as an agent of the IRA custodian and will report all vault transaction data to the custodian for further reporting by the custodian to the IRS. Third, any movement of bitcoin from the vault detected during such monitoring will be reported by the custodian to the IRS as an IRA distribution unless it occurs as part of a prearranged rollover transaction.

Retire with bitcoin

As your lifelong bitcoin financial services partner, Unchained Capital is here to serve all of your bitcoin-related needs, whether it be self-custody, a trading desk, or lending. Bitcoin retirement accounts are a natural extension of our suite of services for both individuals and businesses. We’re here to deliver a white-glove experience for clients who want tax-advantaged access to bitcoin. 

There is no better way to secure your retirement than holding bitcoin with your own private keys in collaborative custody with Unchained Capital.

As Saifedean Ammous explained in the Bitcoin Standard, many of the most important decisions an individual can make are conducted with their future self. Your future self will thank you for taking the time and putting in the effort to set up a bitcoin IRA.

“While microeconomics has focused on transactions between individuals, and macroeconomics on the role of government in the economy, the reality is that the most important economic decisions to any individual’s well-being are the ones they conduct in their trade-offs with their future self. Every day, an individual will conduct a few economic transactions with other people, but they will partake in a far larger number of transactions with their future self.”

Saifedean Ammous
The Bitcoin Standard

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Unchained Capital Inc. does not provide tax, legal, or investment advice. Please consult with your tax accountant, attorney, and/or licensed financial advisor if you need advice on any of these matters. 



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Jeff Vandrew

Jeff Vandrew

Jeff is Head of Retirement & Inheritance at Unchained Capital.