With the increasing number of Australians dabbling in crypto investment, inevitably some SMSF members will wish to add them to their fund. Cryptocurrency is generally allowable subject to adequate consideration in the fund’s investment strategy and allowability in the fund’s trust deed but be careful of variations. Non-fungible assets are arguably works of art and therefore fall into the category of collectables. The draconian rules surrounding collectables significantly discouraged SMSFs from investing in physical works of art. When these rules are applied to digital assets it is clear that it is impossible to comply with them so NFTs simply can’t be held in an SMSF.
Though cryptocurrency is not affected by these rules the lack of audited processes and general lack of auditable evidence surrounding crypto transactions and ownership inevitably leads to SMSF audit qualifications.
Consideration should also be given to the cost of processing crypto data as platforms and downloadable data systems are in their infancy.
Incidentally, our investment strategy documentation tool covers crypto assets.