SMSF Crypto Investing Australia: A Complete Guide

More and more Australians are turning to Self-Managed Super Funds (SMSFs) as a means to boost their retirement savings. Compared to retail and industry super funds, SMSFs offer a wider array of investment options, and the appeal of having full control over you and your family’s portfolio.

As non-traditional investment options grow in popularity, many have questions over the viability of including cryptocurrencies in their SMSF. Crypto, as with all investments, carries risks and rewards. 

If you need guidance when delving into the crypto market, Uptrade is quickly positioning itself as the pre-eminent brokerage partner for Australians seeking to include crypto in their SMSF portfolio. 

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What Is SMSF Crypto Investing?

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Per the ATO, an SMSF is a ‘type of trust set up for the sole purpose of providing retirement benefits to its members.’ Anywhere from 1 to 5 trustees have full control, as well as responsibility for compliance with legal and taxation obligations.  

While SMSFs take time and effort to set up and run, the fact that they currently hold just over $1Trillion in assets suggests they represent an appealing option for an increasing number of savvy investors.  

More Australians are adding cryptocurrency to their SMSFs as they seek to diversify beyond traditional assets. Digital assets are a nascent sector, but are becoming an increasingly legitimate aspect of SMSF-holders’ investment strategy. As awareness grows and regulation improves, crypto investment has a strong upside, but is not without its pitfalls. 

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Benefits of Including Crypto in Your SMSF

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Most SMSF portfolios are primarily based around traditional assets such as shares and property. However, Investment 101 dictates that it is always beneficial to diversify one’s holdings. Digital assets such as crypto provide an innovative way to do so, in an emerging sector with high potential for long-term gains. 

Even investing a small portion of your SMSF into crypto allows trustees to tap into a rapidly expanding digital economy. As blockchain adoption explodes internationally, established cryptocurrencies such as Bitcoin and Ethereum have demonstrated consistently strong long-term growth, in spite of short-term market fluctuations. 

Another appealing aspect of crypto for SMSF holders is a higher level of control over one’s investment choices: you choose how, when and to what extent you buy or sell crypto. This flexibility allows trustees to employ tailored strategies based on their own retirement goals.

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Risks to Consider With SMSF Crypto

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As previously mentioned, while crypto is an appealing option for investors, it is not without its pitfalls. The most obvious of these being the volatility of crypto markets. We have all heard horror stories of reckless investors betting it all on crypto, and losing out when the market takes a dive. 

As governments scramble to work out how to regulate the digital economy, investors are also open to cybersecurity threats and scams from less-established currencies. Risks include hacking, phishing and fraudulent platforms and tokens. 

The aforementioned ever-shifting regulatory environment around crypto also means some degree of uncertainty for investors. The investment landscape in such an emerging industry can be subject to the political whims of the federal government of the day.  

Regulatory and taxation treatment of cryptocurrency is likely to continue to evolve, threatening the stability of trustees’ investments. In this environment, services such as Uptrade are a must for the savvy investor who wishes to reduce the risk and maximise the benefits of crypto investment. 

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Compliance and Regulatory Requirements in Australia

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The ATO requires SMSFs to treat cryptocurrency as an asset for capital gains tax (CGT) purposes. Trustees must ensure all crypto investments align with their fund’s investment strategy and are made only for genuine retirement benefits.

SMSF trustees are also responsible for keeping fund assets separate from personal holdings. This means that you need to keep secure and accurate records of all investments and that they must be held solely under the name of the SMSF.  

Since SMSFs are required by law to subject themselves to audit once a year, all crypto transactions and valuations must also be documented by trustees to demonstrate full transparency. 

Happily, Uptrade can help simplify this process with secure, auditable transactions and clear reporting. With Uptrade, SMSF trustees can set up and manage crypto investments easily, with the peace of mind of working with a trusted Australian platform. 

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How to Set Up SMSF Crypto Investing

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Delving into crypto investments begins with establishing your SMSF per legal procedures. It is highly recommended to seek legal and financial advice before you begin. 

Next, devise an investment strategy by yourself (or in coordination with trustees) which includes crypto, and ensure your crypto investment plan aligns with your fund’s objectives and is legally compliant.  

Once all this is established, you will need to open a dedicated SMSF bank account and register your fund with the ATO before making any investments.

After completing these steps, we recommend partnering with a trusted, secure brokerage platform such as Uptrade to buy and manage your investments. Uptrade specialises solely in crypto investment, with their team not only boasting expertise, but around $100 million in their own personal crypto holdings, proving that they not only have passion – they have skin in the game as well. 

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Best Practices for SMSF Crypto Investors

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While Uptrade is an important tool, we always recommend working with qualified financial and tax advisors as well, to ensure that your SMSF remains compliant with current regulations.

As with anything in the digital world, prioritise security by using strong passwords, two-factor authentication, and secure wallets or custody options to protect your fund’s digital assets from potential threats.

Monitor your investments, and stay up to date with the latest market shifts so that you can make informed, strategic decisions about your SMSF’s crypto holdings.

Uptrade’s dedicated SMSF support program, staffed by real expert investors, can help you to stay on top of the strongest and safest investment tactics for your trustees. 

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Conclusion

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While we believe in providing investors with transparent information regarding the risks of crypto investments, SMSF-holders shouldn’t be dissuaded. With the right strategy, crypto investment provides a rewarding opportunity to get in at the ground level of an emerging market with potential for great ROI.

If you want to be a part of the growing number of Australians boosting their retirement savings with crypto, speak to Uptrade today. Uptrade provides an unparalleled safe and simple entry point for new investors. 

Set up your SMSF crypto portfolio today with Uptrade – the trusted way to invest in digital assets for your retirement.

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