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How Crypto Cold & Hardware Wallets Work Inside of a Rocket Dollar IRA

How Crypto Cold & Hardware Wallets Work Inside of a Rocket Dollar IRA

Henry Yoshida, CEO of Rocket Dollar, wanted to bring on our resident crypto expert, Brendan Walsh, to talk briefly about crypto in an IRA and crypto security, including using a cold storage private wallet.

Brendan Walsh leads the partnerships team at Rocket Dollar. He works closely with crypto partners, crypto exchanges, and crypto investors who have questions about working or investing on the Rocket Dollar platform.

How do you trade and secure crypto when you become a customer at Rocket Dollar?

Instead of one centralized exchange, we work with our Checkbook IRA product. With the Checkbook IRA, you have an IRA, a Colorado LLC, and a fiat bank account.

You can take this LLC and apply to any centralized crypto exchange. As the LLC manager, you are in full control of your cryptocurrency. We have a few recommended exchanges that know how to accept our accounts.

We have instructions for working with various exchanges:

Kraken here. You can work with Kraken's team, apply to one of our other exchanges that accept Rocket Dollar accounts or apply to an exchange you prefer, as long as they have institutional onboarding that respects your LLC name.

Gemini serves all 50 states, including New York and Washington. You can review the instructions here.

River Financial is a Bitcoin only white glove service Exchange

CBOE Digital is  a white glove service exchange 

What are the advantages of using the Checkbook IRA model?

  • As the LLC manager of your cryptocurrency, you can secure your cryptocurrency as you wish.
  • Since Rocket Dollar is a flat fee provider, starting at $360 and then just $15 a month, we do not add on any trade fees when you transact or move your cryptocurrency. All fees are set by the crypto exchange or crypto protocol the investor decides to use, which sometimes takes a blockchain-related transaction fee, which crypto investors are already used to paying. Some competitors of Rocket Dollar can add sky-high transaction fees on basic buys/sells of BTC and ETH.
  • No IRA Custodian Counterparty risk - Rocket Dollar is SOC-2 certified but does not hold any cryptocurrency key for you. As the LLC manager, you can decide how to secure your cryptocurrency.


What wallet types might I encounter in crypto?

  • Centralized Exchange: The exchange holds the crypto for you (e.g. Kraken, Gemini, Coinbase). These exchanges might use wallets to support holding your crypto, but they are owned by the exchange. The exchange and all their crypto wallets must be well capitalized to support you in withdrawing from the exchange. Crypto Exchanges are not banks and do not hold FDIC insurance or guarantees. 

  • Physical/Paper Wallet: Writing down the important 12 or 24-word seed phrase that Metamask, Ledger, and Trezor might interact with to access your cryptocurrency on the blockchain, usually stored in a secure place at home, safe, or safety deposit box.

    It is essential not to lose this word combination. There is an extremely high risk of financial compromise if this is stolen. A malicious actor could bypass a cold wallet and potentially many other protections immediately after entering this seed phrase into their own device.

  • Hot Wallet: Wallets that operate and can be accessed by anyone on the internet to interact with popular decentralized applications (e.g. Metamask, Rainbow).

  • Cold Wallet: Whenever you are holding crypto assets completely disconnected from the internet. You might be able to view the assets by looking up their address with an online blockchain explorer, but you cannot interact with them unless you have the 12 or 24-word seed phrase.

  • Hardware Wallet: These are often called “cold wallets” because your private keys are stored completely offline on a USB-like device (e.g. Ledger, Trezor). Transactions must be signed off within the device itself via a crypto bridge, so at no point does your private key leave the hardware wallet. When you order a hardware wallet, it's important to know that it has not been tampered with, as you will have to enter your important 12 or 24 word seed phrase to access it.

  • Multi-sig: Any wallet with multiple “keys” that need to be executed simultaneously to complete a transaction or access the cryptocurrency assets. These can be set up by the individual user or sometimes by handing one key to a trusted third party.

What wallets can I use with an IRA?

There is no IRS code prohibiting any of the above crypto wallets. You can use any crypto wallet but should take care to know IRS IRA prohibited transaction rules and how the IRS has looked at other non-crypto assets.

If you are purchasing a hardware wallet, you can request a debit card from our partner bank. Ledger allows a business name to be listed when purchasing. You can use list your Checkbook IRA or Solo 401(k) trust name here. 



  • Always keep retirement crypto separate from personal crypto assets, such as a new seed phrase.
  • Whenever possible, notate your Checkbook IRA or Solo 401(k) trust as the owner of the wallet.
  • Devices used for IRA assets should be purchased through the IRA if possible

How do I get started?

  1. Sign up on app.rocketdollar.com/signup
  2. Fund your account with a transfer or contribution
  3. Apply to the Kraken Exchange
  4. Call our bank partner and ask for a debit card if you do not already have one. 
  5. Purchase a Ledger Device with your Checkbook IRA or Solo 401(k) from our partner bank debit card.
  6. Fund the Kraken exchange account from our partner bank, and withdraw to the private wallet as needed. 

Are there any risks to using a crypto wallet in an IRA?

The IRS has never liked assets stored at home. It has specific penalties against storing precious metals at home and has banned “collectibles” in an IRA (artwork, baseball cards) as they often end up in the home on display, just as an NFT collector might display their assets on a social media profile.

While wallets might assist with access, cryptocurrency is secured and custodied on a blockchain network when it leaves a centralized exchange, not your home. Some investors will store their seed phrase in a safety deposit box for security. This helps minimize the number of security assets inside the home.

Are there risks to keeping cryptocurrency on an exchange?

The phrase “not your keys, not your coins” has always been popular in cryptocurrency, and even more recently, following the fallout from the FTX exchange contagion. Investors should be aware if an exchange has proof of reserves, is solvent, and certain disclosures of how crypto is secured and if an exchange cannot meet its obligations.

Many investors who do not desire to stay on an exchange will only keep funds on the exchange for a small amount of time and will use a cold-storage wallet option for the majority of the time until they need to transact.

Are there any risks to keeping crypto in a private wallet?

First, you must avoid any prohibited transaction rules governing all IRAs. The most obvious one in crypto is avoiding commingling personal crypto assets and retirement crypto assets.

This means all new wallets, seed phrases, and even possibly a new crypto hardware device to keep your assets cleanly separated. You cannot send retirement crypto to your personal wallets or a spouse's crypto wallet.

Has the IRS ever released guidance on this topic?

No, there isn't anything that states you cannot use a crypto wallet in the current IRS code. There are rules against holding precious metals at home (McNulty and Collectibles Rule IRC 408 (m)). These rulings only relate to precious metals. Crypto investors should be aware that future rulings can develop. Legal commentary and analysis have focused on the statement in the McNulty Case: However, IRA owners cannot have unfettered command over the IRA assets without tax consequences. Even when using a hardware wallet, cryptocurrency is stored on the blockchain. Make sure to keep good crypto records, a secure seed phrase, and up-to-date on any new regulations posted on the IRS website.

We have over 200 articles in our knowledge base on cryptocurrency, real estate investing, venture capital, and more, all inside of an IRA. You can contact our team at info@rocketdollar.com or call 855-762-5383

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