Bitcoin IRA Is Letting Customers Lend Out Their Crypto Retirement Funds
The firm, which provides digital asset individual retirement accounts (IRAs) is partnering with digital currency trader and lender Genesis Trading to offer interest on cryptocurrency and cash holdings that customers want to lend out, including bitcoin, ether, XRP, litecoin, and zcash.
The program will be launched in November with a limited number of participants on a first-come, first-served basis, and annual interest rates will vary based on lending coin and term length.
Bitcoin IRA declined to define a limit, but chief operating officer Chris Kline told CoinDesk that the firm aims to have the product available to anyone over the next six to seven months.
“We’re breaking new ground here, and we want to make sure clients understand everything and that it works well.”
The product is part of the company’s goal to eliminate annual custodial and monthly wallet fees for customers, he added. Yet, the firm wouldn’t reveal estimates on what interest rates would be.
“We’ll be able to offer more details on interest yields when we have an actual result,” Kline said.
“You’ll see some groups offer up to 8 to 12 percent interest. They often have asterisks next to those numbers … those rates are more in the 2 to 3 to 4 percent range. You’ll see someone deploy a 12 percent rate on bitcoin for three days.”
Bitcoin IRA chose Genesis because of the lending firm’s track record for being able to take on new clients.
Currently, Bitcoin IRA has processed more than $350 million in investments for more than 4,000 clients. Genesis has so far lent out a cumulative $2.3 billion in cryptocurrency and cash.
The product expansion is a deepening of Genesis’ relationship with Bitcoin IRA, which was already using Genesis’ over-the-counter trading desk.
“They are the largest digital IRA provider that we are aware of, and I think that we always want to be working with the leaders in the space,” Martin Garcia, co-head of sales and trading at Genesis, told CoinDesk.
Moving forward, despite legal battle
Bitcoin IRA’s partnership with Genesis comes despite the fact that the pension plan provider is embroiled in a lawsuit with Kingdom Trust, a Kentucky-based trust custodian that supported its product in 2016.
Kingdom claims that Bitcoin IRA has been using deceptive practices to get customers to switch from Kingdom Trust to BitGo, a qualified custodian with which Bitcoin IRA partnered in June.
Jason Anderson, president of Kingdom Trust, told CoinDesk:
“Clients have been surprised to find that their account is being transferred to a new custodian. In a lot of cases clients have chosen to reverse that decision.”
On Friday, a Kentucky federal judge dismissed Kingdom’s claims with prejudice, and Bitcoin IRA has filed a motion that the claims should proceed in South Dakota, where it filed its countersuit.
Despite the suit, Bitcoin IRA hasn’t stopped releasing products. In early September, the firm announced facial recognition for authentication of transactions. Later last month, it announced crypto swaps from bitcoin into ether without delays in settlement.
By next year, the firm aims to make its accounts open to a wider customer base by removing it’s $3,000 account minimum and replacing it with an automatic minimum monthly savings increment. While the firm doesn’t have a set estimate yet, Kline said that $50 a month might be a “realistic estimate.”
“It’s our biggest rollout. It will be designed so that everyone has access to retirement savings for cryptocurrencies.”