How are assets kept "safe" at Alto and on Coinbase?

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 the Coinbase Fiat Wallet are held by Coinbase in an omnibus custodial account, which may be a bank account insured by the FDIC (up to applicable limits) or a trust account holding short term US treasuries as Coinbase may determine.

Cryptocurrencies held in the Coinbase Digital Asset Wallet are maintained by Coinbase in a segregated custodial account, partially in hot storage for liquidity and partially in cold storage.  Because cryptocurrency is not legal tender and is not backed by the government, any losses from investments, including those that result from a failure of Coinbase, are not insured by the FDIC or any other government program or agency. 

Coinbase maintains insurance against losses resulting from failure of its services. However, there can be no guarantee that losses from a failure at Coinbase would be recoverable by Alto or account holders. For more information about Coinbase security and insurance, visit the Coinbase website here.

 

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.