Summary: If you're interested in diversifying your self-managed super fund (SMSF) through cryptocurrency investments, the initial step is to register with a licensed digital asset exchange. We recommend finding one that's regulated by the Australian Securities and Investments Commission (ASIC). Doing so ensures that your SMSF stays within the bounds of legal and tax requirements.
After a thorough assessment of various crypto exchanges that accommodate SMSF accounts, CoinSpot is our top recommendation. It offers an extensive selection of more than 410 cryptocurrencies at competitive fee structures. The platform is speedy in processing your superannuation contributions and ensures that your SMSF account is in line with Australian regulatory standards.
- Fast and easy SMSF onboarding for Australian's to buy, sell & stake 410+ cryptos.
- Regulated by AUSTRAC as a Digital Asset Service Provider and licensed by ASIC.
- Wide variety of features including Staking, NFT Marketplace, Bundles and more.
Can I Buy Bitcoin with my SMSF?
Absolutely, those with a self-managed super fund (SMSF) can invest in cryptocurrencies like Bitcoin on compliant exchanges in Australia. It's essential to use a platform that aligns with Australian legal and tax frameworks to ensure both regulatory compliance and the protection of your superannuation assets. For this reason, we recommend choosing one regulated by the Australian Securities and Investments Commission (ASIC).
How to Buy Crypto with SMSF
For those keen on diversifying their self-managed super fund by adding cryptocurrencies to the mix, you can do so through exchanges that are SMSF-friendly and compliant with Australian financial regulations. We recommend CoinSpot, which offers a broad range of over 410 assets, is regulated by ASIC, and has competitive fees. The platform allows for quick and secure transfers in AUD via PayID, BPAY, bank transfer, credit card and more.
To start your crypto journey within your SMSF, you can follow these four simple steps:
- Create an Account: Register for a CoinSpot account dedicated to your SMSF and complete the mandatory identity verification process.
- Choose Your Currency: Navigate to the 'Deposit Funds' section and pick 'AUD' as the currency you want to deposit.
- Fund the Account: Use the banking options available to transfer your SMSF funds to the platform.
- Make the Investment: Click ‘Buy/Sell’, find your desired token and finalise your trade.
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Is it Legal to Buy Crypto with an SMSF?
Yes, it is legal for a self-managed superannuation fund to invest in cryptocurrencies, but certain rules and considerations must be followed. In Australia, SMSFs are regulated by the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC). Both of these agencies have guidelines in place that must be followed when an SMSF invests in cryptocurrencies or other assets.
One of the main considerations for an SMSF investing in digital currencies is the requirement to act in the best interests of the fund's members and to meet the sole purpose test. This requires that the fund be established solely for the purpose of providing retirement benefits to its members. It is important to carefully consider the risks and ensure that the investment is appropriate for the fund and meets all relevant regulatory requirements.
Pros and Cons of using an SMSF for Crypto
There are both advantages and disadvantages to buying cryptocurrencies with a self-managed superannuation fund. Some of the potential advantages include:
- Diversification: Cryptocurrencies may provide an opportunity for SMSFs to diversify their investment portfolio, which can help to manage risk and potentially increase returns.
- Potential for Growth: They can generate significant returns over the long term, particularly if purchased at a low price and held for an extended period.
- Tax Benefits: An SMSF pays reduced capital gains tax on any profits generated from its investments in cryptocurrencies, which can help to increase the fund's overall return.
However, there are also a number of potential disadvantages to consider, including:
- Volatility: Digital currencies are highly volatile and can fluctuate significantly in value over short periods of time. This means that SMSFs may face significant losses if the value of their investments decreases.
- Risk of fraud: There is a risk of fraud associated with investing in digital assets, as some ICOs (initial coin offerings) and exchanges have turned out to be scams.
- Limited liquidity: It may be difficult to sell large quantities of crypto assets quickly, making it difficult for SMSFs to liquidate their investments if needed.
Overall, it is important for SMSFs to carefully consider the potential advantages and disadvantages of cryptocurrencies and to ensure that investments are appropriate for their investment strategy and risk profile.
Final Thoughts
To sum up, investing in cryptocurrencies with an SMSF is a great way to diversify an investment portfolio and generate additional returns. The best option for Aussie investors is to use an ASIC-licensed digital asset exchange. We recommend CoinSpot as it’s Australia’s largest trading platform and supports over 410 tokens like Bitcoin, Ethereum and Tether for competitively low fees.
Dylan Matthews is the Co-Founder and head of operations at Buy Bitcoin Bank, with a background in engineering and experience as a Prop Trader. He has leveraged his knowledge and skills to build and scale the platform, providing users with a seamless experience for buying and selling cryptocurrency.
