How to add Bitcoin and cryptocurrencies to a self-managed super fund
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Digital assets, including cryptocurrencies, are a promising new asset class. They’ve grown in trust and maturity since Bitcoin, the first cryptocurrency, was launched in 2009.
Cryptocurrency can be used as an investment, to trade, or purchase goods and services. One often under-represented use is in self-managed super funds (SMSFs). Cryptocurrencies can diversify SMSFs in ways retail super funds – who don’t support digital asset investment – cannot.
US-firm Grayscale Investments launched its Bitcoin Trust fund in 2013. Year-to-date, the fund’s return is 38 per cent. By comparison, one of Australia’s best performing super funds returned 9.9 per cent at EOFY 2019.
What are the legalities? Who supports digital asset investment for SMSFs? This Australian focused guide to SMSF investment in cryptocurrencies answers these questions.
Digital assets are legal in Australia and are considered property. For instance, a NSW court accepted cryptocurrency as collateral for legal costs. The judge recognised the assets as a “form of investment”.
While SMSFs are not prohibited from investing in cryptocurrencies, the investment must:
This means meeting investment strategy and risk as per 52B of the SISA and reg 4.09 of the SISR. Cryptocurrencies are also not considered listed securities. Therefore, they cannot be acquired from a related party.
BTC Markets is Australia’s largest cryptocurrency exchange. They support SMSF investment in Bitcoin, Ethereum, XRP and other listed assets. The exchange gives personalised service to SMSF account holders.
BTC Markets is client-focused. They tailor SMSF accounts to the client’s specific needs. Flexible limits help satisfy any investment size. The exchange offers secure asset custody and portfolio management. SMSF accounts also benefit from BTC Markets’ tax reporting feature, making tax preparation simple.
SMSF clients can buy from the exchange or through BTC Markets’ Over the Counter (OTC) service.
OTC is for large order sizes. Transactions occur outside the public exchange and it’s all processed via BTC Markets’ network of liquidity providers. Set rates ensure clients save money on large purchases.
Setting up an SMSF account is easy. The exchange’s friendly and professional client services team will assist you through the sign-up process.
Cryptocurrencies can diversify SMSFs in ways retail super funds cannot. Their continued maturation as an asset class presents exciting opportunities for growth.
BTC Markets is Australia’s leading digital asset exchange, trusted by 270,000 verified clients who have traded over $10.5 billion. Buy, sell and trade Litecoin (LTC), Bitcoin (BTC), Ethereum (ETH), XRP and more with AUD today. Visit BTC Markets for more information.
This article was developed in collaboration with BTC Markets, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.