A quick look at cryptocurrency investing through an SMSF.
Cryptocurrency has been approved since 2014 by the Australian Tax Office (ATO) as an asset class that self managed super funds can choose to invest in. Currently, as of September 2021 there is over $200m or under 1% of all super invested in Australia, invested in crypto. As published by the ASFA – Association of superannuation funds Australia. To do so proper auditing and compliance requirements still need to be maintained just like you would for other asset classes such as shares or property.
The investment strategy of SMSF
To diversify their portfolios, SMSF owners who have cryptocurrencies in their portfolios may have done so instead of investing all of their money in bitcoin. Recently, the crypto asset class experienced rapid growth at the expense of substantial risk, but it appears to be favorable for investors who are willing to accept both large gains and large losses. These factors make the vehicle a risky but potentially rewarding one.
A self-managed super fund’s investment portfolio looks to include crypto. As a result of its erratic performance, it is rarely regarded as a complete SMSF. As a result, the SMSF’s investment portfolio has exposure to both high and low-risk possibilities, with crypto being a more risky option and other asset classes like cash being less risky. For this reason, before investing on behalf of an SMSF, it is usually best to complete a proper investment strategy with the assistance of a financial advisor.
How do you invest in crypto with an SMSF?
Firstly you need to have your SMSF set up for crypto investing. Once the SMSF set up is done you need to set up your SMSF bank account. Then after the bank account is set up you need to set up a crypto exchange account with the likes of Coinspot, Swyftx or Zipmex. All of this needs to be done in the name of your SMSF not your own personal name.
Should you have crypto in your SMSF?
The answer to this question is that you should always seek financial advice from a financial planner. We are not financial planners and do not offer financial advice. That said crypto is proving to be more popular amongst all investors not just those in the superannuation space. It generally suits an investor who is comfortable with risk and the prospect of quick gains and losses. Currently, crypto still only occupies under 1% of all super invested or around $200m in Australia but this is growing at a significant rate each year.
There are several variables that go into deciding whether or not you should or should not invest in a hedge fund. Before making a final decision, you should consult with an expert in this field.
If you want to know about how to invest your super into crypto then feel free to contact us here.