US SEC warns about cryptocurrency-based self-directed IRAs

The US Securities and Exchange Commission (SEC) has advised investors to avoid self-directed individual retirement accounts (IRAs) based on cryptocurrencies.

In an investor alert, the SEC’s Office of Investor Education and Advocacy has warned people that assets in traditional IRAs – such as stocks or bonds - fall within its oversight, but this is not the case with self-directed IRAs, which lack transparency.

Traditional IRA accounts are held for investors by custodians – such as banks or trust companies – approved by the Internal Revenue Service and the holdings are limited to approved stocks, bonds or mutual funds.

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