There are about 15.2 million Bitcoin owners who have retirement accounts with dollars in them, but not Bitcoin. This is up from just 7.1 million in 2019, according to Choice, an offering from independent qualified custodian Kingdom Trust Company, which was founded by CoinShares’ Ryan Radloff.
To address this gap, Radloff joined a few of his “former teammates” and built Choice with a mission to expand access to Bitcoin. Specifically, they want to make it easier for the 60% of Americans who don’t have any other investments outside of their retirement account to invest how they see fit. Choice’s goal is to make it seamless to hold Bitcoin and all the “normal” investments from one retirement account.
Since its launch in May 2020, the Choice platform powers more than 125,000 retirement accounts and custodies more than $18 billion worth of assets across thousands of unique assets. Digital assets now account for $1.6 billion+ or roughly 10% of assets.
On Aug. 12, Choice announced its latest initiative: taking tax-efficient Bitcoin investing mobile and launching on the iOS app store to, in the company’s words, meet today’s investors where they live.
“Now, the moment you decide you want to invest in your future, you can open your phone, create an account and start trading thousands of assets—including Bitcoin—all from the palm of your hand, all without capital gains taxes,” said Radloff, CEO of Choice.
This is the second cryptocurrency retirement mobile app to hit the market, coming less than two months after Bitcoin IRA announced the release of its official mobile app on June 21 that allows users to buy, sell and swap crypto assets inside their self-directed retirement accounts.
At Choice, Radloff says the mission behind the founding has resonated, and not just with alternative investors. In the first half of 2021, Choice said more than half of the incoming client transfers came from the likes of Fidelity, Schwab, Vanguard and TD Ameritrade.
The next step for Choice was rolling out on Apple’s iOS operating system to lower the barrier to tax-efficient investing and meet the majority of the online population where they are the most: on their phones.
“Over 80% of Facebook and Twitter usage is via mobile, so to actually solve the retirement crisis the U.S. faces, we had to make retirement accessible and meet people where they already live their lives. Today we are taking a big step in that direction,” Radloff said in an Aug. 12 statement.
For those who own Bitcoin and have a retirement account—but don’t own Bitcoin in their retirement account—Radloff said Choice’s iOS app is the easiest way to invest in Bitcoin. By buying Bitcoin in their IRA, Choice points out that users don’t have to pay capital gains taxes—and if they invest in a Roth IRA, they won’t ever have to pay taxes on their gains.
In 2020, Choice became the first company to allow clients to invest in both digital and traditional assets from a single tax-advantaged account; and in 2017, Kingdom Trust, the trust that powers Choice, became the first qualified custodian globally to offer custody for Bitcoin.
Demand rises, obstacles remain
While a growing chorus of retirement savers are clamoring for greater access to crypto, Radloff told 401k Specialist it doesn’t stop there.
“People’s interest in Bitcoin—in a retirement account or not—is increasing exponentially because they are dissatisfied with the legacy financial system. As Bitcoin becomes a larger part of people’s financial lives, they begin to look for tax-efficient ways to buy it. That’s where we come in.”
With Bitcoin ETFs still on hold by the SEC (to which Radloff said, “We’re hoping it gets approved so our users can start trading it”), the primary retirement vehicle for holding crypto remains self-directed IRAs.
These accounts, opened with a custodian, are where the individual makes all the investment decisions and are tax-sheltered until retirement. Choice/Kingdom Trust and Bitcoin IRA both use this model.
“So far as retirement accounts go, right now, with Bitcoin, it’s IRAs, IRAs, IRAs,” Onramp Invest CEO Tyrone Ross told CNBC recently. Onramp sells software that helps financial advisors keep track of client cryptocurrency investments.
“Because it’s considered property by the IRS…that is why you’re seeing the self-directed IRA space explode,” Ross said. “There’s a lot of regulation to get through before you get it into the 401k space.”
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