ASIC hopes SMSFs steer clear of speculative currencies

By Lucy Dean

February 16 2018
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An authority at the investments watchdog has said he hopes the SMSF sector prevents “the more speculative cryptocurrencies” from becoming a major part of the sector.

Speaking at the SMSF Association’s national conference in Sydney yesterday, the Australian Securities and Investments Commission (ASIC) deputy chair Peter Kell said ASIC is paying special attention to cryptocurrencies and initial coin offerings given their evolving nature.

“It's rapidly evolving in terms of whether some of these offerings are financial products are not, and regulated or not,” he said in conversation with the Australian Taxation Office’s deputy commissioner of superannuation James O’Halloran and Treasury’s Robert Jeremenko.

“I can assure you, it's one that we're keeping an eye on as to whether it's in the SMSF world. I don't have a good sense of that but I would hope that we're not seeing a lot of the more speculative cryptocurrencies becoming a main feature of this sector.”

The ATO’s Mr O’Halloran agreed that the way SMSFs navigate cryptocurrencies would be a key focus for the office in 2018.

In additional comment provided to Nest Egg’s sister publication, SMSF Adviser, he said: “As you’re no doubt aware, there has been quite a bit of discussion recently in the community regarding cryptocurrencies. We have had a few questions come to us on the subject of investing in these within SMSFs.

“While the regulatory and tax laws that apply to SMSFs don’t specifically prohibit investment in bitcoin or other cryptocurrencies, in addition to the tax considerations that arise, there are also super regulatory matters that must be considered by anyone contemplating investing in cryptocurrencies in their super fund.”

He said that the very nature of cryptocurrencies means that compliance with SMSF regulations and restrictions is automatically more difficult.

“For example, the regulatory requirement that the fund’s assets are managed separately from the member’s personal and business assets and ensuring that the SMSF has clear legal ownership of the bitcoin or relevant cryptocurrency, as well ensuring that the investment is appropriately valued for both accounting and tax purposes.”

As a result of this, he said trustees should make sure that their investments in cryptocurrency align with the fund’s investment strategy, as they would for any SMSF investment.

He urged SMSFs trustees to consider seeking independent professional advice.

Assistant Treasurer Michael Sukkar earlier this month revealed that Treasury was in discussion with the ATO about the taxation, regulation and classification of cryptocurrencies. However, he said any developments are at “embryonic stages”.

“In the short term, really the most important thing for us to do is give pretty good guidance – particularly through the ATO – on how people treat these for tax purposes,” he said.

“That would almost be a starting point for anyone who’s realised a gain in this financial year, and as I’ve been told, those gains were very big.”

The SMSF Association listed Bitcoin Trader as a “valued sponsor” for the event. Bitcoin Trader was also present at the 2017 SMSF Association conference.

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Retirement