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Bitcoin Investments Allowed in Fidelity IRAs, Then Immediately Yanked

By Hal M. Bundrick

NEW YORK (MainStreet) There was a very small window of opportunity for speculative investors to buy bitcoins as an IRA investment at Fidelity this month, but that window was slammed shut with no explanation. Apparently, only one investor was able to make the trade.

According to Saumya Vaishampayan with MarketWatch, Fidelity had partnered with Secondmarket's Bitcoin Investment Trust to allow wealthy, accredited investors to invest in the digital currency through their self-directed IRAs. It is reported that Chamath Palihapitiya, a member of SecondMarket's board of directors and part owner of the Golden State Warriors, was the only investor allowed to buy into the trust before Fidelity halted further investments.

"According to my family office, I am the first person to have bought BTC thru my Fidelity IRA," Palihapitiya tweeted last Thursday. "Long live tax free compounding!"

But Fidelity put a quick halt to the spreading news.

"On an individual basis, we allowed an investor to invest in that Bitcoin Investment Trust," Rob Beauregard, director of public relations at Fidelity, told MarketWatch Thursday. "We are no longer allowing that."

Fidelity offered no further explanation regarding the sudden investment restriction.

The Bitcoin Investment Trust is a private, open-ended trust invested exclusively in bitcoin, requiring a minimum investment of $25,000.

"The BIT was created for accredited investors looking for exposure to bitcoin through an investment vehicle as opposed to a direct investment," Secondmarket's website says. "The BIT solves the challenges of buying, storing and safekeeping bitcoins."

The net asset value of the trust was $12.88 on September 25th, closing at $86.96 on September 12th. The BIT hit a high-water mark of $110.96 on December 4th.

Mt. Gox, a leading bitcoin exchange reports a price of $930 per bitcoin early Friday. The price topped $1,200 earlier this month, notably equaling the value of an ounce of gold.

Self-directed IRAs allow investors to put alternative investments such as real estate, timber, precious metals, promissory notes, foreign currency, tax liens and even private business investments into a tax-advantaged IRA.

--Written by Hal M. Bundrick for MainStreet