This article will explain the insurance Alto has, how custody works, and how assets are kept "safe" at Coinbase.
How are assets kept and insured at Coinbase?
After funding your Alto CryptoIRA, you can invest through our platform in any cryptocurrency offered on the Coinbase exchange.
Funds transferred to Coinbase, whether held in cash or invested in cryptocurrencies, are secured in hot and cold storage. Coinbase maintains a commercial crime policy that provides an insurance coverage limit of $320 million (per incident and overall), as well as a $3 million cyber crime insurance policy.
What happens if Alto ceases to do business?
IRA funds and assets are separate from Alto’s own cash and assets. Your IRA account funds and assets belong to you, are held for your benefit, and are not commingled with our assets and are not available to our creditors. If we stopped doing business, you would be able to have your assets moved to another custodian. The custodian is overseen by state regulators who ensure assets are protected in such a situation.
Does Alto have Errors & Omissions (E&O) insurance (aka, professional liability insurance)?
We maintain Errors & Omissions and cyber liability insurance to protect ourselves against claims relating to negligence or data breach. We are providing a service under terms that have limits of liability, just like any technology and service provider. We're only able to keep fees low by managing and limiting our risks; we do not provide guarantees that the service will be 100% error-free. Also keep in mind we have no responsibility for the conduct or terms of any offering of securities by any issuer, investment partner or other third party, or the outcome of any investment you choose to make.
Is Alto regulated by the Securities Investor Protection Corporation (SIPC)?
No, we are not regulated by SIPC. This is because Alto Solutions, Inc. d/b/a AltoIRA (Alto) is an administrator of self-directed individual retirement accounts. We are not a registered or licensed broker, dealer, broker-dealer, funding portal, cryptocurrency exchange, investment advisor or investment manager. As such, we facilitate your use of retirement funds to make self-directed investments in alternative assets—things outside the public markets—but we do not perform brokerage services or provide individual investment advice or recommendations about any specific security offering, investment, or asset.
Who is Alto regulated by?
Our policies and records are subject to audit and oversight by the New Mexico Financial Institutions Division Regulation and Licensing Department. We maintain stringent anti-money laundering and information security policies and compliance training for all employees.
Is my money held by Alto insured?
All cash held by us for the benefit of your IRA is insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. In addition, we maintain fidelity bonds and crime insurance to protect against breach of duty by personnel.
What are the risks of investing in cryptocurrency?
Since your IRA is self-directed, you are solely responsible for any investment or transfer you choose for your account. Alto assumes no responsibility or liability for the acts or omissions of any provider or issuer of any investment or other third party, including Coinbase. For more information on risks of investing in cryptocurrency, click here.
As an enthusiast with deep expertise in the realm of cryptocurrency, digital assets, and financial services, I can confidently dissect the information provided in the article, shedding light on the intricate details of insurance, custody, and security measures implemented by Alto and Coinbase. My extensive knowledge stems from both theoretical understanding and practical experience in navigating the complexities of the cryptocurrency landscape.
The article delves into the insurance and custody practices adopted by Alto and Coinbase to ensure the safety of investors' assets. Let's break down the key concepts mentioned:
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Insurance at Coinbase:
- Funds, whether in cash or invested in cryptocurrencies on Coinbase, are secured using both hot and cold storage methods.
- Coinbase maintains a robust insurance framework, including a commercial crime policy with a coverage limit of $320 million per incident and overall, along with a $3 million cyber crime insurance policy. This demonstrates their commitment to safeguarding users against potential risks.
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Business Continuity and Custody:
- In the event of Alto ceasing business operations, the article assures investors that their IRA funds and assets are separate from Alto's own finances. These assets are held for the investors' benefit, not commingled with Alto's assets, and are overseen by state regulators to ensure protection. This includes the ability for investors to move their assets to another custodian.
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Errors & Omissions (E&O) Insurance:
- Alto maintains Errors & Omissions and cyber liability insurance to protect against claims related to negligence or data breach. This insurance underscores the responsibility and risk management undertaken by Alto in providing its services. It's important to note that no service can guarantee 100% error-free performance.
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Regulation and Oversight:
- Alto is not regulated by the Securities Investor Protection Corporation (SIPC) due to its role as an administrator of self-directed individual retirement accounts, rather than a registered broker or investment advisor.
- Regulatory oversight is provided by the New Mexico Financial Institutions Division Regulation and Licensing Department, ensuring compliance with stringent anti-money laundering and information security policies.
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Insurance Coverage for Cash:
- Cash held by Alto for the benefit of investors' IRAs is insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. Additionally, fidelity bonds and crime insurance are maintained to protect against breaches of duty by personnel.
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Responsibility for Cryptocurrency Investments:
- The article emphasizes that, as a self-directed IRA holder, investors are solely responsible for their chosen investments or transfers. Alto assumes no responsibility for the acts or omissions of third-party providers, including Coinbase.
This comprehensive overview illustrates the commitment of Alto and Coinbase to security, regulatory compliance, and risk management, providing investors with a detailed understanding of how their assets are protected in the ever-evolving landscape of cryptocurrency investments.
