Investors can buy cryptocurrency in a few different ways. In this segment of "The Crypto Show" on Motley Fool Live, recorded on Feb. 23, Fool.com contributors Jon Quast and Travis Hoium answer a member's question about whether crypto can be bought through a Roth IRA.
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Jon Quast: To my understanding, directly, no, you can't do that. I think that you would have to have some sort of approved exchange-traded fund in order to be able to do that.
Travis Hoium: Because you buy the Grayscale (GBTC 1.23%) series of products too, which are actually direct. My understanding is that there's two basic avenues. There are the exchange-traded funds, ETFs, that aren't actually buying cryptocurrency, they're buying futures. Then there are the Grayscale products which are actually buying cryptocurrency and holding them in their own cold wallet. I believe Coinbase (COIN -0.34%) does the cold storage for that.
Quast: I think you're right.
Hoium: That is a direct ownership, but slightly different mechanisms. I can't answer directly whether those can be bought in retirement accounts, but that would be the two ways to do it.
Quast: Let's say, for example, you're interested in buying and holding Bitcoin. To my knowledge, you can't do that in a Roth IRA, but you could theoretically buy something like MicroStrategy (MSTR -2.00%) stock, which is basically Bitcoin (BTC 0.63%) at this point.
Hoium: Like leveraged Bitcoin.
Quast: Yes, you're right. It is leveraged Bitcoin. To answer your question, Vihan, I would say no, would be the answer directly. But there are these little indirect workarounds that would give you significant exposure to cryptocurrency. The other would be something like a Marathon Digital Holdings (MARA -0.42%), which is also a lot, a lot of Bitcoin on the balance sheet. Orion blockchain would be another one.
Hoium: A lot of the miners are not only generating income from mining Bitcoin but then also holding that Bitcoin on their balance sheet. Again, it's another leverage play. Bitcoin goes up, they make more money from their operations and to their balance sheet. Bitcoin goes down, the opposite happens.
There's going to be more and more products coming to market in the crypto space. There are almost every week that will probably really fit into retirement accounts or different kinds of trading accounts that fit into the ETF or exchange-traded note framework. They're not a lot of them available today.
