Yesterday, I reported on Marketwatch’s Wednesday article detailing how Fidelity has given the green light to individuals to invest in Second Market’s Bitcoin Investment Trust via self-directed Individual Retirement Accounts (IRA). I also pointed out that the management fees from the Bitcoin Investment Trust make it a less than ideal retirement plan anyways. However, the appeal to sophisticated investors interested in Bitcoin is that Second Market’s Bitcoin Investment Trust allows the weight of regulatory compliance to be shifted away for a small premium.
Today is a new day, so it seems. Marketwatch’s Thursday article reveals that Fidelity’s Director of Public Relations, Rob Beauregard, stated in a phone interview that Fidelity investors are “no longer allowed to do that.”
This is a huge blow against individuals that would want to use their tax-sheltered IRAs to keep from paying excess taxes on Bitcoin. What the tax consequences of holding Bitcoin will be in a few years in the United States is not yet entirely clear; therefore, the demand for such a formalized, regulated, and sanctioned form of Bitcoin investment is and will continue to be high.
Now, Fidelity might agree with me that the Bitcoin Investment Trust is no good for IRAs; however, they have undoubtedly dropped Second Market for all the wrong reasons. Fidelity has not commented on why Second Market’s Bitcoin Investment Trust, which previously had passed inspection and approval by Fidelity in the first place, is no longer an option. The Bitcoin community has their own thoughts on the matter though.
