Cryptocurrency Emerges as the Fastest-Growing Asset Class in Australian Self-Managed Superannuation Funds
Mitchell Nixon
Per CoinTelegraph, Australians are increasingly turning to cryptocurrency to bolster their retirement savings, with allocations from self-managed pension funds surging by 400% in four years, outpacing growth rates in stocks and bonds.
Data from the Australian Tax Office (ATO) as of September’s quarter reveal that approximately 612,000 self-managed super funds (SMSFs) now hold a collective $658.6 million (992 million Australian dollars) in cryptocurrencies. This marks a substantial surge from the same period in 2019 when holdings were just under $131.5 million (198 million Australian dollars).
Self-managed super funds in Australia, also termed private superannuation funds, allow individuals to manage their retirement investments. Despite this autonomy, the Australian Tax Office oversees the retirement scheme, mandating compliance with superannuation laws.
Koinly’s head of tax, Danny Talwar, informed Cointelegraph that this trend establishes cryptocurrency as the “largest growing asset class in SMSFs.”
In contrast, although listed shares retained the top spot as the most significant allocation category for SMSFs in the previous quarter, they experienced a 28% growth rate over the same period. Conversely, allocations to debt securities like bonds decreased by 5.8% over four years.
Nevertheless, despite cryptocurrency’s overall growth, total SMSF allocations to crypto experienced a slight 0.8% decline from the quarter ending June 2023 and a 2.4% drop compared to the previous year.
However, the crypto holdings in self-managed funds have declined by 38% compared to the record high of nearly $1.06 billion (1.6 billion Australian dollars) in the quarter ending June 2021 during the previous crypto bull market.
Despite this, Talwar emphasised that crypto constituted merely 0.1% of the total net assets held in Australian SMSFs by the last quarter’s end. He highlighted a trend where smaller-sized SMSFs tended to allocate more to cryptocurrencies within their portfolios.
The inclusion of crypto within a super fund is becoming increasingly common, according to Talwar, with local crypto exchanges offering crypto-based superannuation products on the rise. However, he cautioned about the stricter regulations surrounding crypto holdings in super funds, emphasising the need for compliance with SMSF strategies and regulations for retirement benefits.
“People want to want to hold crypto. You can hold crypto in super, but there are some stricter rules around it,” Talwar warned.
“Your SMSF strategy must allow you to hold crypto. It must be for the sole purpose of providing you with a retirement benefit. You need to get everything audited. You need to segregate SMSF holdings from personal holdings, you can’t have a blurred line between the two.”
Details about specific cryptocurrencies held within SMSFs and their gains or losses remain undisclosed, as the ATO does not furnish information on portfolio holdings or performance.