Do You Need An SMSF To Invest In Bitcoin?
In 2019, it has been reported that the number of self-managed super fund (SMSF) trustees are including cryptocurrencies to be part of their SMSF investment strategies.
“Self-managed super funds (SMSFs) are a way of saving for your retirement. The difference between an SMSF and other types of funds is that the members of an SMSF are usually also the trustees. This means the members of the SMSF run it for their benefit and are responsible for complying with the super and tax laws.”
Source: Australian Tax Office (https://www.ato.gov.au/Super/Self-managed-super-funds/)
Although the price of Bitcoin is seen to be very volatile, it still has many investors that are seriously considering looking at cryptocurrency to be part of their SMSF investment portfolio. There are a number of important areas that trustees need to be thinking of before considering investing their SMSF towards Bitcoin or other crypto assets.
Recently, we covered the Pros and Cons of Buying Bitcoin and Cryptocurrency in your Superannuation with an expert in the field so that's a good place to find out more information.
As with every SMSF investment, Bitcoin and cryptocurrency have to be included in the documented investment strategy of the SMSF. So, the SMSF investment strategy must consider the following:
- The fund’s ability to pay benefits and other costs if it occurs.
- Diversification (invest in a various range of asset classes and assets)
- The liquidity of the fund’s assets.
- To hold insurance cover or not for each member of your SMSF.
- Risk and return considerations of your members’ needs and circumstances.
On the other hand, those already with an SMSF trust deed and are looking to invest in cryptocurrencies, the trustees will have to update their investment strategy document so that it includes crypto assets.
Key things to note when Investing in Bitcoin through SMSF
There are some keys things individuals should be cautious of if they want to invest in Bitcoin through a SMSF.
- You will have a lot of responsibility when operating and starting a SMSF.
- Superannuation is highly regulated and has to be taken very seriously.
- Disobeying the rules can have severe consequences.
- You must know the cost to set up a SMSF and the ongoing costs.
- Have knowledge of cryptocurrencies.
Bottom Line: Do you need an SMSF to Invest in Bitcoin?
There are many ways you can invest in Bitcoin which means that you do not need an SMSF to invest in Bitcoin. One way to invest in Bitcoin is to go onto a platform where you can trade currency like Coinbase. You can purchase Bitcoin and keep your cryptocurrency on Coinbase as well as many other types of cryptocurrencies.
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