While it is technically possible to get exposure to cryptocurrency assets in a Roth IRA, its not really straightforward. Since cryptocurrency regulations are still evolving, a lot of brokerages do not allow for investing in cryptocurrencies directly through Roth IRAs.  Here’s a look at how to buy cryptocurrency in your Roth IRA and several potential options to facilitate crypto investments in your retirement account.

Can You Hold Crypto in a Roth IRA?

Certain investments are restricted in a Roth IRA, including direct purchase of property for personal use. While the restrictions do not specifically include cryptocurrencies, the IRS treats virtual currencies as property. That lack of clarity makes holding Bitcoin, Ether, and other popular digital currencies in your Roth account a little different and trickier compared to buying a stock in the same account. Most mainstream brokerage firms, such as Fidelity, Schwab, E*Trade and Vanguard, don’t offer options to buy cryptocurrency directly. That means you’ll have to be creative about investing in crypto or look for alternative providers that support cryptocurrency IRAs. Also, before moving forward, it’s important to understand the risks associated with digital currencies. While crypto coins and tokens can be fun and lucrative investments, the high levels of risk make them a poor choice for retirement accounts for many investors. Only buy cryptocurrency in your retirement account if you understand how they work and the risks involved.

How To Get Cryptocurrencies in Your Roth IRA

While most brokerages do not allow you to directly invest in cryptocurrencies, there are still ways you can get exposure to cryptocurrencies through your Roth IRA.

Self-Directed Roth IRAs

Self-directed Roth IRAs are retirement accounts that allow investors to invest into assets that they typically won’t be able to with a regular Roth IRA, including cryptocurrencies. Here’s a snapshot of several providers of cryptocurrency Roth IRA accounts:

iTrustCapital: iTrustCapital features cryptocurrency IRA accounts, including cryptocurrency Roth IRAs, with no monthly recurring fees. It supports 28 different cryptocurrencies and requires a 1% trading fee when buying and selling crypto.Alto: Alto offers a Roth IRA connected to Coinbase, making a large number of currencies available. There’s a 1% trade fee but no other recurring charges for crypto-specific IRA accounts.Rocket Dollar: Rocket Dollar supports a self-directed “checkbook control” Roth IRA. With this account, you can invest in anything you can buy with a checking account, excluding certain items not permitted by the IRS for retirement accounts. Accounts require a minimum $360 setup fee and $15 per month ongoing. They also enable you to use any cryptocurrency exchange or your own cryptocurrency wallet for your Roth IRA investments.

Some companies traded on the stock market are involved in cryptocurrency mining or trading. Examples include Coinbase and Riot Blockchain. There may be other companies that hold cryptocurrency as an asset, facilitate cryptocurrency transactions, or engage in the cryptocurrency ecosystem in other ways. A lot of brokerages allow exposure to cryptocurrency assets in Roth IRAs through such stocks.

Buy Cryptocurrency Funds

When searching in your brokerage account, you may encounter a growing list of cryptocurrency and blockchain ETFs. There are other options called cryptocurrency coin trusts that are similar to ETFs. Examples include Grayscale Bitcoin Trust, Grayscale Ethereum Trust, Bitwise 10 Crypto Index Fund, and Osprey Bitcoin Trust. Note that these funds charge fees to purchase and hold cryptocurrency on your behalf, which you may be able to do on your own at a lower cost.

How You Can Buy Cryptocurrency With an IRA

Follow these steps to buy cryptocurrency with an IRA:

Cryptocurrency in a Roth IRA: What To Watch Out For 

Cryptocurrency laws could change quickly after government action, such as when China recently outlawed cryptocurrency mining. While you can freely buy and sell most cryptocurrencies in the United States today, that could change in the future. In March 2022, President Joe Biden published an executive order relating to cryptocurrency, so its regulation is definitely on the government’s radar. Because cryptocurrencies are still relatively new and carry more risk than most conventional IRA investments, you may want to consider keeping cryptocurrency out of your retirement plans. However, if you believe in the long-term potential of cryptocurrency, several providers are standing by to facilitate your crypto Roth IRA investments. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!