Want to diversify your portfolio?
With a Squirrel SMSF you can invest in cryptocurrencies, if you have determined they are a suitable and appropriate investment as part of your fund’s diversified investment strategy.
Your Super, Your Strategy
Switching to a Squirrel SMSF gives you complete financial freedom, within the requirements prescribed by law, for how your super is invested. For some that means diversifying their portfolio by investing in cryptocurrencies or other digital assets. Through your SMSF, you can use your super to invest in digital assets if you have determined they are an appropriate part of your fund’s investment strategy, as you seek to grow your wealth for retirement - but be warned, this is a highly risky type of investment, and many digital assets have seen significant swings in their asset prices, so it requires careful research and ongoing attention, or you could lose your money.
High Risk Investment
As a relatively new asset class and with huge volatility in price, cryptocurrencies are a high-risk investment that could potentially result in huge returns or major losses. If you are interested in cryptocurrencies and see potential for their adoption in the future, then you can invest in many of these digital assets through your SMSF. We recommend you get specialist advice from an independent, licensed investment professional, before making investment of this type.
Cryptocurrency Audits
There is currently limited information from the ATO on how they govern cryptocurrencies as an asset class. It’s therefore important that you are on top of all your accounts when it comes to audit time. Our team have experience in helping our customers with crypto investments through the audit process and are always on hand to help you when you need us.
Why Squirrel?
Your Investment Dashboard
See exactly how your investments are performing, simply by logging into your account. Accessible wherever and whenever you want it, you can track your entire portfolio at the tap of a finger.
Information about Crypto
The Australian Securities and Investments Commission provide information on their MonetySmart webpage about crypto currencies and you can access their site here: https://moneysmart.gov.au/investment-warnings/cryptocurrencies
Compliance Support
How you invest is up to you, but we’re on hand to assist you so you can make sure you’re compliant for your SMSF’s annual audit. You also have unlimited telephone and email support with our Squirrel Support team
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Benefits Of Crypto Investments
Many of our customers are choosing to invest in cryptocurrencies.
- High-risk - and the potential for high rewards
There are thousands of cryptocurrencies on the market, and each has its own particular quirks. But all cryptocurrencies have things in common, such as their tendency to experience sudden spikes and drops in value. Prices are driven primarily by the supply of coins from miners and the demand for them by purchasers. And these supply-demand dynamics can potentially result in hefty losses and returns. - The blockchain technology underlying cryptocurrency is inherently secure
Some benefits of cryptocurrencies are that they not linked to the currencies themselves, but to the infrastructure that supports them. That is the blockchain—the decentralised data-storage ledger that tracks every transaction undertaken on it. Once you make an entry in the blockchain, it can never be erased. And with the blockchain stored de-centrally across multiple computers, no hacker can access the entire chain in one go. - An alternative to traditional financial institutions
Our financial system revolves around third-party intermediaries who process transactions. This means that if you make a transaction, you are placing your trust in one or more of these intermediaries. The blockchain and cryptocurrencies offer an alternative. They can be viewed by anyone, anywhere, so you can take part in the financial markets and make transactions with no intermediaries whatsoever. - Crypto markets are always open
With coins being mined and transactions being recorded around the clock, you do not have to wait for the ASX, NYSE, NASDAQ or any other exchange to start trading for the day if you want to transact crypto. So, for investors who are on the go 24/7, crypto enables you to transact outside of normal working hours. - Cryptocurrencies could help investors beat inflation
Cryptocurrencies are not tied to a single currency or economy, so their price reflects global demand rather than the level of inflation in your own country.
Risks Of Crypto Investments
Investing in cryptocurrencies such as Bitcoin is highly risky. Here are some important things to consider.
- Crypto is not regulated
Many crypto-assets and other digital assets are commonly not considered to be financial products. Because of this, the platforms where you buy and sell crypto may not be regulated by ASIC. This means you may not be protected if the platform fails or is hacked. When a cryptocurrency fails, investors can lose all the money they put in. In most countries, cryptocurrencies are not recognised as legal tender. You are only protected to the extent that they fit within existing laws. - The value depends largely on popular opinion
Investing in crypto-assets is highly speculative. The market value can fluctuate a lot over short periods of time and is affected by things like media hype and investor opinion. The price of crypto may depend on:- its popularity at a given time (influenced by factors like the number of people using it)
- how easy it is to trade or use it
- the perceived value of the currency
- its underlying blockchain technology
- Your money could be stolen
Be aware that a hacker can potentially steal the contents of your digital wallet. Your digital wallet has a public key and a private key (like a password or PIN). However, crypto-asset systems allow users to remain relatively anonymous and there is no central data bank. If a hacker steals your crypto-asset, you have little hope of getting it back. Using a wallet that is held offline, called a ‘hardware wallet’ or ‘cold storage,’ may provide additional protection. - Technically complex
Crypto-assets can be technically complex and difficult to understand. Unlike traditional financial products, there is usually no product disclosure statement or prospectus that explains in plain English, and in one place, how the crypto-asset operates. A crypto-asset’s code may not always be available for users to review. In cases where it is available, it may be written in uncommon or obscure computing languages. The processes for interacting directly with crypto-asset networks is also unfamiliar to many people. They may require special-purpose software and an understanding of how transaction fees operate. Unfamiliar users run the risk of:- sending a transaction to an incorrect address
- over-paying on transaction fees called ‘gas’ (sometimes by thousands of dollars)
- not paying enough for a transaction fee (and so losing the fee and transaction)