Stellar (XLM) in iTrustCapital Crypto IRA Retirement Accounts

Summary

You can invest in Stellar (XLM) in a tax-advantaged IRA* through iTrustCapital. A Crypto IRA allows eligible investors to buy and sell XLM within a tax-advantaged retirement account, offering either tax-deferred growth with a Traditional IRA or tax-free qualified withdrawals with a Roth IRA. For investors who prefer a taxable account instead of a retirement account, iTrustCapital also offers a Premium Custody Account (PCA), providing access to XLM with institutional-grade custody and 24/7 access outside of an IRA.

Stellar Key Facts

Attribute	Details
Founder	Jed McCaleb
Launch Year	2014
Consensus Mechanism	Stellar Consensus Protocol (SCP)
Primary Use Case	Cross-border payments and stablecoin infrastructure
Notable Partnerships	IBM World Wire, Circle/USDC

Who Created Stellar?

The Stellar story starts with Jed McCaleb. He is fairly prolific in the crypto industry having created the first large-scale Bitcoin exchange, known as Mt. Gox. In 2011, he founded and was the CTO of Ripple until moving on to create Stellar in 2014. He built Stellar as a fork of Ripple (XRP) and while having similar underpinning technology, he had a much different and larger vision than his original Ripple creation.

What is Stellar?

Stellar is an open-source blockchain network for storing and moving money that enables the creation, sending, and trading of any digital asset. The original intention was to allow the entire world's financial systems to work together through the single network known as Stellar. One can think of Stellar as a next-generation payment system, with its own unique digital currency.

Unlike Bitcoin's Proof of Work or Ethereum's Proof of Stake protocol, Stellar uses the Stellar Consensus Protocol (SCP). This protocol does not require approval from every miner in the network for a transaction. Instead, it employs the Federated Byzantine Agreement algorithm, a method that enhances the speed of transaction processing.

History of Stellar

Stellar has achieved several key milestones since its founding:

2014: Jed McCaleb launched Stellar after departing from Ripple, forking the Ripple codebase to create a new network focused on financial inclusion.
2018: Stellar partnered with IBM for the World Wire Program, designed for financial institutions to use stablecoins built on Stellar to streamline payments and settlements.
2021: Circle announced that it was adding Stellar to its growing list of blockchains that support USDC, the stablecoin that primarily lives on Ethereum.

Stablecoins have shown to be not only a critical piece of infrastructure for decentralized finance but they have the potential to truly change global finance and cross-border payments as a whole.

Stellar vs. Ripple: Key Differences

While Stellar was forked from Ripple and shares some underlying technology, the two projects differ in important ways:

Target Market: Ripple primarily targets large financial institutions and banks, while Stellar focuses on serving individuals and smaller businesses, particularly in underbanked regions.
Governance: Ripple is a for-profit company that controls a significant portion of XRP, whereas Stellar operates through the non-profit Stellar Development Foundation.
Consensus: Both use similar consensus mechanisms, but Stellar's SCP is designed to be more decentralized and open to participation.
Purpose: Ripple aims to replace SWIFT for institutional cross-border payments, while Stellar seeks to enable financial access for everyone through a decentralized marketplace.

What is Stellar Lumens (XLM)?

Stellar Lumens (XLM) is the native digital asset of the Stellar blockchain. XLM serves multiple important functions within the network:

Paying transaction fees: XLM is required to pay for all transactions on the Stellar network
Acting as a bridge currency: XLM facilitates exchanges between stablecoins and other digital assets built on Stellar
Preventing spam transactions: A small amount of XLM is required for each transaction, deterring network abuse
Facilitating multi-currency transactions: XLM enables seamless conversion between different currencies and assets on the network

How to Buy Stellar (XLM) in an IRA

Step 1: Open a Self-Directed IRA

To buy and sell XLM in a retirement account, you'll need a self-directed IRA (SDIRA). Unlike traditional IRAs that are limited to stocks and mutual funds, an SDIRA allows access to alternative assets such as cryptocurrencies.

Step 2: Choose a Platform That Supports Crypto IRAs

Not all platforms support digital assets. You'll need a platform, like iTrustCapital, that enables you to buy, sell, and hold XLM within an IRA structure. iTrustCapital offers both Traditional and Roth IRAs designed specifically for cryptocurrencies like Stellar.

Step 3: Fund Your IRA

You can fund your SDIRA in several ways, including:

Transfer from an existing IRA
Rollover from a 401(k) or other qualified retirement plan
Cash contribution (subject to annual IRS contribution limits)

Step 4: Buy & Sell XLM

Once funded, you can buy XLM directly within your IRA. On the iTrustCapital platform, clients can buy and sell XLM 24/7 alongside other supported digital assets, all with tax-benefits.

Step 5: Monitor Your Portfolio

You can track performance, review allocations, and manage transactions through your IRA dashboard.

Open a Crypto IRA at iTrustCapital

If you're interested in buying and selling XLM, you can do so at iTrustCapital. iTrustCapital offers a simple and secure way to buy and sell XLM and dozens of other digital assets in a tax-advantaged IRA*.

Here's why thousands of clients choose iTrustCapital:

Tax-Advantaged Accounts: You can choose between Traditional and Roth IRAs to buy and sell XLM with potential tax-deferred growth or tax-free qualified withdrawals.
24/7 Access to Crypto Markets: Buy and sell XLM anytime, without market-hour restrictions.
Institutional-Grade Custody: iTrustCapital works with third-party institutional storage providers, including Coinbase Custody and Fireblocks, to secure client assets.
Low Fees: A 1% transaction fee with no monthly, annual, commission, or storage fees.
Award-Winning U.S.-Based Client Support: Get help when you need it. Our experienced support team is available Monday–Friday to answer questions.

Click here to get started and open an account today!

*Some taxes may apply.

Frequently Asked Questions

What is the difference between Stellar and Ripple?

Although both projects were founded by Jed McCaleb and share similar origins, they serve different audiences. Ripple primarily develops payment solutions for banks and financial institutions, while Stellar focuses on improving access to affordable financial services for individuals, businesses, and organizations around the world. Stellar is governed by the non-profit Stellar Development Foundation, whereas Ripple is operated by a for-profit company.

What are Stellar Lumens (XLM) used for?

XLM is the native cryptocurrency of the Stellar blockchain and plays several important roles within the network. It is used to pay transaction fees, facilitate exchanges between different currencies and digital assets, and help protect the network from spam by requiring a small fee for every transaction. XLM also acts as a bridge asset that can simplify cross-border transfers between different currencies.

How does Stellar's consensus mechanism work?

Stellar uses the Stellar Consensus Protocol (SCP) rather than Proof of Work or Proof of Stake. SCP relies on a Federated Byzantine Agreement model, allowing trusted groups of validators to reach agreement without every participant validating every transaction. This approach enables fast settlement times while maintaining network security and decentralization.

What is the maximum supply of Stellar (XLM)?

Stellar currently has a maximum supply of approximately 50 billion XLM. Unlike Bitcoin, Stellar originally had an inflation mechanism that was later removed through a network vote. Today, the token supply is fixed, with a portion of the total supply held by the Stellar Development Foundation to support ecosystem growth and development initiatives.

Why do people invest in Stellar (XLM)?

Many investors are interested in Stellar because of its focus on fast, low-cost global payments and digital asset transfers. The network has also become an important platform for stablecoins such as USDC and has collaborated with organizations including IBM and Circle. While these developments have increased adoption, investors should remember that cryptocurrencies remain volatile and carry investment risk.

Is Stellar (XLM) a good investment for retirement?

Whether Stellar is appropriate for a retirement portfolio depends on an investor's financial goals, risk tolerance, and overall investment strategy. Because cryptocurrencies can experience significant price fluctuations, many investors choose to hold them as one component of a diversified portfolio rather than as their only retirement investment. iTrustCapital provides access to XLM through both Traditional and Roth Crypto IRAs, allowing investors to gain exposure within a tax-advantaged retirement account.

Can you transfer an existing IRA into a Stellar (XLM) Crypto IRA?

Yes. Many investors fund a Crypto IRA by transferring an existing IRA or rolling over funds from an eligible employer-sponsored retirement plan, such as a 401(k). Once the account is funded, eligible investors can purchase Stellar (XLM) and other supported digital assets through the iTrustCapital platform without creating a taxable event during a properly executed transfer or rollover.*

Categories:

Cryptocurrency

DISCLAIMER

This article is for informational purposes only and does not constitute investment advice or an offer to buy or sell any cryptocurrency, digital asset or security or to participate in any particular investment strategy.

iTrustCapital is a fintech software platform for alternative assets. iTrustCapital is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager or adviser. iTrustCapital has no direct relationship, and is not associated with XLM. iTrustCapital is not affiliated with and does not endorse any particular digital asset, precious metal or investment strategy.

Investing in any digital asset or cryptocurrency carries significant risks due to their speculative and highly volatile nature. No investment is completely risk-free, and every investment carries the potential for losing some or all of the principal amount invested. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Digital asset (Cryptocurrency) deposits held with institutional storage providers are never FDIC insured and may lose value. Clients do not receive a choice of custody partner.

Investors assume the risk of all purchase and sale decisions. iTrustCapital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrustCapital does not provide legal, investment or tax advice. Conduct your own research and consult with a qualified legal, investment, or tax professional to assess your own risk tolerance prior to investing.

iTrustCapital makes no representation or warranty as to the accuracy or completeness of this information and does not have any liability for any representations (expressed or implied) or omissions from the information contained herein. iTrustCapital disclaims any and all liability to any party for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising directly or indirectly from any use of this information, which is provided as is, without warranties.