A millenial’s guide to digital asset investing inside super
Liam is a 35-year-old FIFO electrician earning $240,000 a year. His wife, Zoe, works part-time while raising their two young children. Between them, they have $200,000 sitting in retail super funds.
Frustrated by limited investment options and no control over strategy, Liam wants to roll their super into a self-managed superannuation fund (SMSF) and invest in a portfolio of digital assets — from Bitcoin to emerging altcoins.
Can they do it? Yes. Should they? That depends on structure, risk management, and tight compliance.
The crypto-savvy SMSF: Opportunities & red flags
SMSFs can invest in crypto assets, but only if done within strict regulatory boundaries. Get it wrong, and your fund could be non-compliant – exposing you to penalties, tax consequences, or audit failure.
Let’s break down what Liam and Zoe need to know.
Step 1: Create the right SMSF foundation
- Corporate trustee: Establish the SMSF with a corporate trustee to support long-term flexibility, control and estate planning.
- Special purpose deed: Use a deed that explicitly permits digital asset investment. Many older deeds do not.
- Customised investment strategy: Your strategy must:
- Identify crypto as an allowable asset class
- State how these assets align with the members’ risk profile
- Address volatility, liquidity, and storage protocol
Step 2: Compliant crypto acquisition and storage
The ATO has strict views on how SMSFs must hold crypto:
- Ownership: The crypto must be held in the name of the fund – not in Liam’s or Zoe’s personal names.
- Separation of assets: The wallet must be completely separate from personal accounts. No blurred lines.
- Record-keeping: Maintain audit trails, wallet keys, transaction records and independent pricing valuations.
- Cold wallets: Preferably store crypto in an offline wallet with trustee access protocol and backup stored with the SMSF deed.
- No personal use: Crypto held by the SMSF must never be used to buy goods or services. That breaches the sole purpose test.
What can go wrong?
- A Sydney man was fined after using SMSF crypto to buy a car
- One trustee forgot his cold wallet password — $90,000 lost forever
- Another had no record of transactions, causing an ATO audit failure and forced wind-up
Opportunities with crypto in an SMSF
- Tax-effective gains: Capital gains on crypto held for 12+ months in accumulation phase receive a 33% discount. In pension phase, gains may be tax-free.
- Diversification: Crypto can be part of a broader portfolio strategy alongside ETFs or property.
- Control: Choose coins, wallets, entry and exit points.
What Liam and Zoe did
- Set up an SMSF with a digital-asset ready deed
- Rolled in their $200,000 and allocated $60,000 to a diversified crypto basket
- Stored the assets in a cold wallet under the fund’s name, with backups held securely off-site
- Updated their investment strategy and insured the portfolio
Final word
Crypto inside super? It can work – with the right structure, documentation, and legal support. SMSFs offer unmatched control, but trustees like Liam and Zoe must be disciplined, compliant and strategic.
