The value of cryptocurrency assets inside Australian self managed superannuation funds (SMSFs) increased by 589.9% ($1.17bn) between June 2019 and June 2022, according to the latest ATO statistics.

While cryptocurrency is a relatively small asset class at only 0.16% of the $837bn held in SMSFs, it is a growing asset class, larger than collectibles and personal use assets, and overseas property.

ASIC warns of SMSF cryptocurrency scams

Earlier this year, ASIC issued a warning on an increase in marketing encouraging Australians to switch from retail superannuation funds to SMSFs so they can invest in 'high return' portfolios. The regulator states that crypto-assets are a high risk and speculative investment and best practice is to seek advice from a licensed financial adviser before agreeing to transfer superannuation out of a regulated fund into an SMSF.

Investing in crypto

Trustees are free to invest in assets that meet the requirements of the fund and comply with the regulatory requirements:

Trust Deed - must allow for cryptocurrency assets.
Investment strategy - With cryptocurrency's high volatility and risks, there must be clearly articulated information in the Investment Strategy.
Separation of assets – cryptocurrency assets must be held in a wallet in the name of the SMSF.
Sole purpose test - Your SMSF needs to meet the sole purpose test to be eligible for the tax concessions normally available to super funds.

Download the full October 2022 Client Newsletter