Crypto in SMSFs

Self-managed super funds can legally invest in cryptocurrencies, with over $1.67 billion now held in crypto assets across Australian SMSFs as of March 2025. Many trustees are exploring crypto to diversify portfolios and potentially enhance retirement outcomes, but success requires careful attention to compliance, security and tax obligations. This guide walks you through everything you need to know about adding crypto to your SMSF safely and legally.

Frequently Asked Questions

Can SMSFs invest in cryptocurrencies?

Yes, but with strict conditions. SMSFs can invest in crypto assets provided they:

Meet the sole purpose test (building retirement benefits for members)
Include crypto investments explicitly in the trust deed and investment strategy
Comply with all ATO record-keeping and valuation requirements
Separate SMSF crypto assets from personal holdings

The ATO requires that crypto investments serve only one purpose: building retirement benefits. Any personal use or benefit from SMSF crypto holdings would breach superannuation law.

What crypto assets can SMSFs hold?

SMSFs can invest in various crypto assets, including:

Primary cryptocurrencies:

Bitcoin (BTC)
Ethereum (ETH)
Other established cryptocurrencies

Alternative crypto assets:

Stablecoins (USDC, USDT)
Utility tokens
Governance tokens

Generally prohibited or high-risk:

Non-fungible tokens (NFTs) - limited investment merit
Meme coins or highly speculative tokens
Assets that could be deemed personal use items

The key test is whether the asset has genuine investment potential and serves the sole purpose of providing retirement benefits.

What does the law and ATO guidance say?

Core compliance requirements:

Trust deed: Must explicitly permit crypto investments
Investment strategy: Must include crypto allocation and risk assessment
Separation: Keep personal crypto investments separate from SMSF assets - failure to do this can breach the Superannuation Industry (Supervision) Act 1993
Arms-length: All transactions must be at market rates
Record-keeping: Comprehensive transaction records required

ATO guidance emphasises:

Using legitimate, regulated platforms only
Maintaining proper market valuations
Protecting wallet security
Avoiding related-party transactions

How should the SMSF investment strategy address crypto?

Your investment strategy must include:

Risk assessment:

Crypto volatility and market risk
Technology and security risks
Regulatory change risk
Liquidity considerations

Allocation limits:

Maximum percentage of fund assets in crypto
Diversification across crypto types
Correlation with other investments

Implementation approach:

Preferred platforms and custodians
Security protocols
Rebalancing triggers
Exit strategies

Most advisers recommend limiting crypto to 5-10% of total SMSF assets initially, though this varies based on member circumstances and risk tolerance.

Custody: Self-custody vs third-party custodians

Self-custody (cold storage)

Pros:

Complete control over assets
No counterparty risk
Lower ongoing fees

Cons:

Technical complexity
Security responsibility
Risk of lost keys/passwords
Compliance burden

Third-party custodians

Pros:

Professional security
Simplified compliance
Insurance coverage
Regular reporting

Cons:

Counterparty risk
Higher fees
Less control

Best practice: Most SMSFs should use regulated third-party custodians unless trustees have significant crypto expertise. Ensure the custodian registers the SMSF's crypto wallet in the SMSF's name.

Record-keeping and reporting requirements

Essential records:

All transactions: Purchase, sale, transfer dates and amounts
Valuations: Market values at acquisition and disposal
Wallet information: Public addresses, custodian details
Tax calculations: CGT on all disposal events

CGT events include:

Selling crypto for fiat currency
Trading one crypto for another
Using crypto to purchase goods/services
Transferring between personal and SMSF wallets

The ATO classifies sales and transfers as 'disposals' that may result in capital gains tax. Maintain detailed records for CGT calculations.

Security: Key operational measures

Essential security protocols:

For self-custody:

Hardware wallets (Ledger, Trezor)
Multi-signature setups where possible
Secure backup of seed phrases
Regular security audits

For all SMSFs:

Use legitimate platforms with proper licensing and HTTPS security
Enable two-factor authentication
Regular password updates
Separate devices for crypto activities
Professional cybersecurity insurance

Password protection: Never share wallet passwords with anyone and store them securely to prevent unauthorised access.

Case Study: Simple Bitcoin Investment

Scenario

SMSF purchases 0.5 BTC, holds with custodian, sells portion after two years.

Transaction 1 - Purchase (1 Jan 2025):

Purchase: 0.5 BTC at $100,000 AUD
Platform fee: $500
Total cost: $50,500

Journal entry:

Dr. Cryptocurrency - Bitcoin $50,500 Cr. Cash Account $50,500

Ongoing (Annual):

Custodian fees: $300/year
Insurance: $200/year
Market valuation: 31 Dec 2025 - $120,000 AUD (0.5 BTC)

Transaction 2 - Partial sale (1 Jan 2027):

Sell: 0.2 BTC at $140,000 AUD total market value
Proceeds: $28,000 (0.2 × $140,000)
Platform fee: $280

Journal entry:

Dr. Cash Account $27,720 Dr. Transaction costs $280 Cr. Cryptocurrency - Bitcoin $20,200 Cr. Capital gain $7,800

Tax outcome (accumulation phase):

Cost base (0.2 BTC): $20,200 (0.2 × $50,500/0.5)
Capital gain: $7,800 ($28,000 - $20,200)
Tax payable: $780 (10% - held >12 months)

Compliance steps:

Record all transactions in SMSF accounts
Obtain market valuations at year-end
Report capital gains in annual return
Maintain supporting documentation

Before You Add Crypto to Your SMSF - Checklist

Essential pre-investment tasks:

☐

Trust deed review - Confirm crypto investment powers exist

☐

Investment strategy update - Include crypto allocation, risks, and rationale

☐

Platform due diligence - Research and select regulated providers

☐

Custody plan - Decide self-custody vs third-party arrangements

☐

Insurance review - Ensure adequate cyber and professional coverage

☐

Record-keeping systems - Implement transaction tracking and reporting

☐

Security protocols - Establish wallet security and password management

☐

Professional advice - Consult SMSF specialist before implementation

☐

Valuation procedures - Arrange market valuation sources and schedules

☐

Tax planning - Consider timing and pension phase implications

☐

Risk assessment - Document crypto risks in investment strategy

☐

Monitoring framework - Set up regular compliance and performance reviews

Summary

Cryptocurrency investments through SMSFs offer potential portfolio diversification but require careful attention to compliance, security and tax obligations. Success depends on proper planning, selecting appropriate platforms or custodians, maintaining comprehensive records, and seeking professional advice when needed.

The regulatory environment continues to evolve, making it essential to stay current with ATO guidance and industry best practices. Start conservatively with small allocations, prioritise security and compliance over returns, and always maintain the separation between personal and SMSF crypto activities.

Key takeaway: While SMSFs can legally hold crypto assets, the technical and compliance requirements mean this strategy suits only those trustees willing to invest in proper systems, security and professional support.

Disclaimer: This is general information only. It does not constitute legal, tax or financial advice. SMSF trustees should obtain independent professional advice before making investment decisions. The information in this guide is current as of 27 August 2025.

About the Author: This guide has been prepared by a financial content specialist with expertise in Australian superannuation law, SMSF compliance and cryptocurrency taxation. Updated regularly to reflect current ATO guidance and regulatory requirements.