One of the hidden challenges in using crypto in IRA accounts is the custody and audit burden. Unlike stocks or bonds, cryptocurrencies require special tech infrastructure (cold storage, key control, multisig setups) and often demand proof-of-reserve or independent audit attestations. The degree to which these demands differ depends heavily on which IRA wrapper you choose.
If your wrapper or chosen custodian isn’t prepared to manage these additional burdens, you could find compatibility issues, cost overruns, or regulatory exposure. That’s why understanding which wrappers are better supported for crypto is essential. The comparative guidance in “Choosing the Right IRA Wrapper for Digital Assets” delves into how custody, reporting, and audit tasks evolve depending on your wrapper.
For example, in a Roth wrapper, where gains are tax-free on qualified withdrawal, the IRS might pay more attention to valuation and auditing practices. Therefore, custodians supporting Roth + crypto often invest more in audit infrastructure to ensure compliance. On the other hand, some traditional IRA wrappers may skirt certain burdens, but also face higher tax liability later.
Another difference is the way required minimum distributions (RMDs) interact with audit or valuation demands. If your wrapper demands that you liquidate or distribute assets at a certain age, you may require more frequent valuations — a burden for crypto. A wrapper that allows you to defer distributions or has more lenient rules reduces that burden.
In practice, when evaluating a custodian, match their crypto custody and audit capacity to your wrapper plan, and refer to resources such as “Choosing the Right IRA Wrapper for Digital Assets” to double-check whether the custodian’s offering aligns with what your wrapper demands.