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This story originally appeared on Business Insider
Cryptocurrencies are more than just a way to make a quick profit for a growing number of millennials looking to add bitcoins to their bond portfolio so they can take advantage of this asset class long after today's meme-like hype is gone.
"We don't sell Bitcoin through retirement accounts, we sell retirement accounts to Bitcoiners," Ryan Radloff, Chief Executive Office of Kingdom Trust, told Insider.
Radloff, who co-founded Coinshares, one of the world's largest digital asset managers, said he sees a niche in the market for the 7.1 million Bitcoin owners.
"My co-founders who started CoinShares in Europe, we understand exactly where our market is … So effective, I think a lot of this is just telling them," Guys, hey, I've been with you since 2012 Bitcoin was a hundred dollars. Guess what? There is a tax efficient way to do this that is now not grayscale. Now you can literally keep your own keys in a retirement account. "
Although Bitcoin is one of the top performing assets of the past year, growing nearly 300%, its luster has waned recently. Concerns about the environmental impact of the mining process and increasing regulatory scrutiny saw Bitcoin drop below $ 30,000 at one point this week, wiping out all year-to-date profits.
Related: Why Small Businesses Should Consider Bitcoin
However, younger investors are ready to live with the volatility. Radloff's thirst for Bitcoin and digital assets will certainly remain insatiable. Today he heads the Kingdom Trust, which has more than 120,000 retirement accounts and $ 18 billion in assets.
He co-developed the Choice app to meet the need for greater diversification in the US fixed income market of $ 34.6 trillion. There are several types of retirement accounts, such as individual retirement accounts (IRAs) and 401 (k) s (group pensions that come from your employer). IRAs can be self-directed, called SDIRAs, which allow users to incorporate Bitcoin as part of a broader asset allocation strategy.
The average Choice user opens a retirement account at around $ 85,000 and is in their mid-30s and early 40s, Radloff said. In just one year, he added that customer appetites for Bitcoin and other digital assets had doubled to over $ 2 billion.
“Our average Choice account is around $ 220,000. So about 65% of those assets are in digital assets, ”he said. "So they don't usually start like that. It usually starts at 10-25%."
As tempting as it may be to aggressively pursue Bitcoin as a retirement growth strategy, market analysts advise caution.
Related: How to Buy, Sell, and Keep Track of Bitcoin
"Investing in crypto assets or related investments and lending generally involves very high risks with investors' money," the UK Financial Conduct Authority said in January. "When consumers invest in such products, they should be ready to lose all their money."
The investment advisors for private investors also advise caution.
"Until there is a real direction of travel in terms of digital payments and digital currencies, (alongside) a framework setup and (crypto) being brought more into the regulatory realm, there will be concerns about investing in them," Susannah Streeter, Senior Investment and Market Analyst at Hargreaves Lansdown said.
She added that it may be premature to buy crypto as China cracks down on crypto assets and central banks are considering introducing their own digital currencies like stablecoins as you may not be able to easily redeem them as your retirement age approaches.
She also had specific advice on how to protect yourself:
Before you consider managing your own retirement pot, build up substantial spending reserves for 3 to 6 months. If you are about to retire, then build a portfolio that is more weighted in stable asset classes or tracker funds.
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