What could be improved
Available cryptocurrencies
You can only buy 12 cryptocurrencies with iTrustCapital, although it says more will come soon. It does offer all the most popular digital currencies, including Bitcoin, Ethereum, and Cardano. However, cryptocurrency exchanges have much bigger selections, so if you want to invest in a broad selection of coins, you may need to look elsewhere.
Fees and account minimums
iTrustCapital compares well with other cryptocurrency IRAs when it comes to account minimums and fees. It has some of the lowest crypto IRA fees around.
However, if you look at it alongside ordinary brokerages and crypto exchanges, it’s less appealing. Many top IRA accounts offer commission-free trading with no account minimums — though you can’t buy crypto. And several cryptocurrency exchanges charge less per transaction, have no account minimums, and don’t charge monthly fees.
It isn’t unusual to pay monthly maintenance fees for a self-directed IRA, because there’s quite a bit of administration involved. So you’ll need to weigh the potential tax savings against the costs.
No interest-bearing account
Some cryptocurrency accounts, including other crypto IRAs, let you earn interest on your crypto assets. This means you benefit from any appreciation in value as well as interest payments. It’s a bit like dividend-paying stocks. iTrustCapital does not pay interest on your cryptocurrencies, which is something else to factor into your decision.
Custodial wallet: You don’t control the keys
Old-school crypto investors who’ve experienced large-scale crypto exchange hacks, failures, and scams firmly believe that you need to control the keys to your crypto. What does that mean? When you buy cryptocurrency, there’s a private key associated with it — a bit like your signature.
You need that key if you want to buy, sell, or trade your coins. If your cryptocurrencies are held in a custodial wallet, somebody else controls those keys. It’s a bit like allowing your bank manager to sign checks for you.
However, the paperwork involved would make it almost impossible to maintain a self-directed IRA in your own non-custodial account. iTrustCapital keeps your funds in a custodial wallet and does the paperwork for you. Unless you’re a tax whiz, if you want the tax advantages of a self-directed IRA, you need to keep your cryptocurrencies with the crypto IRA where you bought them. Plus, these days, crypto exchanges are a lot more secure than they used to be.