Can Your SMSF Invest in Cryptocurrency?
Yes, an SMSF can invest in cryptocurrency provided the investment is permitted under the trust deed, held and recorded in the SMSF's name separately from personal assets, and properly documented in the super fund's Investment Strategy given its high-risk and largely unregulated nature.
What are the compliance risks of SMSF cryptocurrency investment?
Regulation of cryptocurrency by ASIC remains in its infancy, meaning trustees carry more responsibility for due diligence on the platform used. Cryptocurrency also needs to be classified as a high-risk asset within the super fund's Investment Strategy.
How should cryptocurrency accounts be set up for an SMSF?
The cryptocurrency platform needs to be set up in the name of the SMSF trustee as trustee for the super fund, with an SMSF bank account linked to it, keeping the holding clearly separate from personal or related entity investments.
What records does the auditor need for cryptocurrency holdings?
Auditors typically require platform reports for the financial year, screenshots confirming the account name and linked bank account, and if held in a cold wallet, screenshots of holdings and transactions along with the blockchain address as at 30 June.
Should cryptocurrency be included in the Investment Strategy?
Yes. The Investment Strategy needs to document the trustees' consideration of cryptocurrency's high risk and volatility, along with the reasons for any lack of diversification if it represents a large proportion of the super fund's total assets.
Frequently asked questions
Can I hold SMSF cryptocurrency in a personal wallet?
No, cryptocurrency held by the SMSF needs to be clearly separated from personal holdings and set up in the name of the SMSF trustee.
What records are needed at 30 June for crypto holdings?
Platform reports, screenshots showing holdings and account ownership, and for cold wallet holdings, the blockchain address and evidence of the balance at 30 June.
Is cryptocurrency considered high risk for an SMSF?
Yes, it's generally treated as a high-risk, volatile asset class that needs to be specifically addressed in the super fund's Investment Strategy.
Investing your SMSF in cryptocurrency? Contact Lifetime SMSF on 1300 031 943 or visit lifetimesmsf.com.au to talk to a specialist.
This information is general and factual in nature. It is not financial product advice, legal advice or tax advice. Lifetime SMSF Pty Ltd is not licensed to provide financial product advice under the Corporations Act 2001. If you require personal advice, consult an appropriately licensed or authorised financial adviser.