SMSF Cryptocurrency Investing: Dispelling the FUD

There has been a lot of confusion recently—thanks to an August 9 notice published by the Australian Taxation Office (ATO)—among self-managed super fund (SMSF) trustees in relation to a so-called ‘90-per-cent rule’, with many inbound queries coming from those with exposure to the cryptocurrency asset class.

In light of this, Nugget’s News reached out to New Brighton Capital chief executive Mike White on behalf of those seeking clarification over whether such a rule—which was widely misinterpreted as meaning that it is illegal for SMSFs to have more than 90 per cent of its value invested in a single asset class—even exists. New Brighton Capital, for those unaware, specialises in helping Australian cryptocurrency enthusiasts own cryptocurrencies in their SMSFs.

Speaking to Nugget’s News founder Alex Saunders in a recent video interview, White reassured viewers that “the most important thing to understand about the 90-per-cent rule is it actually does not exist.”

“If I was going to say what they (the ATO) were referring to [when it specified the 90-per-cent figure in its notice],” White speculated, “there are actually diversification rules in an SMSF. It isn’t a 90-per-cent rule, but there is a diversification rule, and that can really be considered more of a guideline. Really, what that refers to is the fact that you need to take diversification into consideration.”

But this is only one factor a trustee must “take into consideration” when thinking about their SMSF’s investment strategy. Other factors include the needs of the members, age of the members, and how much income these members are going to need at a given point of time in the future. According to White, “as long as you are taking everything into consideration and investing for the long-term benefit of the members, then you are doing the right thing.”

To be sure, an SMSF that is too heavily concentrated in a single asset class—especially one as nascent and therefore volatile as cryptocurrencies—can, as the ATO stated in its recent notice, “expose the SMSF and its members to unnecessary risk if a significant investment fails.” Just so we’re clear, though: there exists no hard-and-fast rule specifying the maximum percentage an SMSF is able to be exposed to a given asset class.

For the full conversation between the New Brighton Capital and Nugget’s News heads—which also covers topics including the current macroeconomic climate, negative interest rates, bail-in laws, and the changing nature of equity demand—click on the below video from the Nugget’s News YouTube channel.

To delve further into SMSFs and how they are able to gain exposure to cryptocurrencies, Nugget’s News recommends contacting New Brighton Capital, one of its longest and most trusted partners.

To delve further into SMSFs and how they are able to gain exposure to cryptocurrencies, Nugget’s News recommends contacting New Brighton Capital, one of its longest and most trusted partners.

Simply by being a Nugget’s News subscriber, you are able to partake in a free, 20-minute consultation with one of New Brighton Capital’s professionals. No string attached. Better yet, the partnership grants Nugget’s News subscribers zero fees for a month—valued at $140—when they set up a cryptocurrency SMSF with New Brighton Capital and become an ongoing service client.

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