In this guide
The increased interest and investment in cryptocurrency assets by SMSFs have led to a greater level of scrutiny from regulators.
It has also resulted in the release of further SMSF trustee guidance materials from the Australian Taxation Office (ATO). The most recent, in May 2025, was a paper highlighting the issues the ATO sees as being of key relevance for SMSF trustees and which provides a number of ‘essential tips’ to help navigate crypto investments in an SMSF.
What is a cryptocurrency?
A cryptocurrency is a form of digital (or virtual) currency separate to physical (‘fiat’) currencies issued by central banks and treasuries of sovereign governments around the world.
It is digital in the sense that it is created through a computerised algorithmic process that involves the use of advanced cryptographic techniques (hence ‘crypto’). Changes of ownership are recorded via chain-linked digital ‘blocks’, which once ‘written’ cannot be subsequently changed.
This ability to evidence and audit ownership changes without the need for government oversight was the impetus for the rapid growth of various cryptocurrencies, starting with Bitcoin in 2009.
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Bitcoin was celebrated as a new frontier in ‘decentralised’ finance, theoretically giving users the ability to have a medium of financial exchange that was beyond the control of any government or monetary authority.
Since then, there has been an explosion of products that collectively sit under the ‘crypto’ banner but vary widely in their risk and return characteristics.
As of July 2025, there were almost 37 million cryptocurrencies globally, although not all of them were active or meaningful, compared with just 500 a decade ago. The sector has a global market value of a staggering US$3.95 trillion, with Bitcoin alone accounting for US$2.3 trillion.
Needless to say, the cryptocurrency boom has attracted investors and speculators who view cryptocurrency as an alternative asset class with potential for big capital gains, rather than as a means of exchange for products or services. For that reason, we’ll use the term ‘crypto asset’ rather than cryptocurrency from here on, as we believe it better captures the nature of these offerings today.
Types of crypto assets
As mentioned above, cryptocurrencies such as Bitcoin were the original crypto asset.
Other crypto assets that have emerged in more recent years include:
Non-fungible Tokens (NFTs)
NFTs are tokens that record ownership of a digital object on the blockchain. It might be a digital image or likeness of a real object, but the key characteristic is that each individual NFT is uniquely identifiable from every other.
NFTs are therefore considered ‘non-fungible’, as no tokens can be replaced by a similar one. Owning an NFT, however, does not of itself confer the holder any rights to the real object on which it may be based.
Stablecoins
A stablecoin is a term for any crypto asset that aims to maintain a stable value relative to a reference asset, or collection of assets.
Stablecoins may try to maintain a close pricing relationship with a fiat currency (e.g. the US dollar, commodity (such as gold), or some other financial asset, such as bonds or share indices).
Various techniques are used to try and ‘peg’ the price of a stablecoin to its chosen reference asset, from backing the stablecoin 1-for-1 with a trusted, stable external asset such as US government bonds to using algorithms to manipulate the demand and supply of the stablecoin in question.
DeFi tokens
DeFi tokens are created through participating in various decentralised finance (hence ‘DeFi’) protocols.
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These tokens are used within systems that seek to decentralise certain finance functions such as insurance, lending and exchanges, often by entities called decentralised autonomous organisations (DAOs).
DeFi is a relatively new entrant in the crypto asset world and should be considered a ‘work in progress’ and treated accordingly.
Can SMSFs hold crypto assets?
Yes, SMSFs can hold crypto assets, provided certain conditions are met.
The current view of the ATO is that crypto assets are a legitimate form of investment for SMSFs provided that:
- They are allowed under the fund’s trust deed
- They comply with the fund’s investment strategy
- They comply with all relevant super legislation, just like any other SMSF investment must do. For example, SMSF crypto assets must be:
- Held in the fund’s name (not in the names of individual fund members)
- Valued according to ATO guidelines (explained later in this article).
For this reason, it is considered best practice if your SMSF’s trust deed is amended to specifically include crypto assets as a class or type of investment that might be held by the fund, together with their permissible allocations within your fund’s investment strategy.
The ATO only started including crypto assets in its SMSF statistics in 2018–19; at the time, crypto assets totalled around $200 million. As of March 2025, that figure had grown to $1.67 billion, but that is still a relative drop in the ocean when considering total SMSF assets that now exceed $1 trillion.
Interestingly, crypto asset holdings as a percentage of total assets is highest among SMSFs with lower balances, which indicates it may be most popular with younger members who have only recently established an SMSF.
How can my SMSF buy and sell cryptocurrencies?
To invest in crypto assets for your SMSF, you will need a secure digital wallet – the online equivalent of a bank account in the crypto world. You will also most likely need the services of a crypto exchange, the crypto equivalent of an online brokerage.
There a two key types of crypto-asset wallets: hot wallets and cold wallets.
Hot wallets are offered by most crypto asset exchanges and involve storing crypto assets in an online application. The upside is ease of setup, ease of use and access to a potentially greater range of crypto assets.
Cold wallets hold crypto assets offline and do not rely on constant internet connectivity. Users receive a unique digital ‘key’ that allows them to access the wallet on whatever device it may be stored.
For their greater security features, cold wallets are generally considered more in line with the governance standards expected of SMSF trustees.
Like all SMSF investments, your SMSF crypto assets must be kept separate from your personal crypto assets.
Ideally, you should set up a single digital wallet for all your fund’s crypto asset transactions to make record keeping as simple and transparent as possible.
You can use the Australian dollars in your SMSF’s bank account to buy crypto assets. When you’re selling, crypto assets can be converted back to Australian dollars. It’s important to remember, though, that the proceeds of SMSF crypto asset investments are just like any other superannuation investment. They can’t be accessed until fund members reach their preservation age.
The proceeds received from crypto asset sales should be transferred to your SMSF’s bank account so you can declare any profit or loss you’ve made on any crypto asset transactions as part of your fund’s annual reporting obligations to the ATO.
What are the tax implications of SMSF crypto asset investments?
It’s a legal requirement for SMSFs to value their assets according to ATO guidelines as part of their annual reporting, and crypto assets are no different. They must be valued at their current market value as at close of trade on June 30 at the end of each financial year.
Crypto assets are also regarded as an asset for capital gains tax (CGT) purposes. If your fund makes a capital gain when selling a crypto asset, you will crystallise a CGT event and may have tax payable as a result.
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The CGT rate for SMSF assets that have been held for longer than 12 months is effectively 10%. This is a one-third discount on the full CGT rate of 15% for assets your fund has owned for less than 12 months.
However, if cryptocurrency assets are being used to fund the pensions of members in your SMSF, any capital gain on their sale may not be subject to CGT, where these members are 60 years of age or older.
The potential risks of SMSF crypto asset investments
Crypto assets are not legal tender, even though they can be used to pay for goods and services if a seller is prepared to accept them. This means crypto assets do not have the backing of the Australian Government, unlike the Australian dollar, which is backed by the Reserve Bank and the Australian Government.
Investors are unlikely to receive government support if a crypto asset they hold ceases to exist for any reason.
Part of the allure of crypto assets was the sense of freedom they once conveyed, in being financial instruments beyond the control of legislators and regulators of any country.
This deregulation zeitgeist did, however, come with a major downside: the loss of most investor protections built into modern financial systems.
So, when cracks started to appear in crypto markets in 2022, starting with a South Korean-based stablecoin pair, Terra-Luna, there was nothing to prevent holders from suffering losses of up to 98% almost overnight.
Further collapses of crypto-related entities that year alone included trading platform Voyager, Singapore-based crypto hedge fund Three Arrows Capital, crypto lender BlockFi and by far the biggest of them all, Bahama-based crypto exchange FTX. According to Reuters, FTX had about US$1 billion of client funds missing and unaccounted for.
ATO tips for SMSF trustees
The ATO has provided tips for SMSF trustees to consider when holding crypto investments through their SMSF:
- Name your wallet correctly: Make sure your SMSF’s crypto wallet is registered in the correct name.
SMSF assets should be held as: “SMSF Trustee Name” as trustee for “SMSF Name.” For example, ABC Pty Ltd as trustee for XYZ Superfund. - Separate investments: Keep your personal crypto investments separate from your SMSF’s assets. Failing to do this can be a breach of the Superannuation Industry (Supervision) Act 1993.
This is why using the appropriate designation on asset ownership, as referred to in the point above, is so important. - Use legitimate platforms: Always purchase and trade on reputable, well-established platforms. Check that they are a registered business or licensed by a relevant authority, look for independent reviews and user feedback, ensure the site uses secure HTTPS connections and understand their policies (e.g. refunds, dispute resolution).
You should also consider contacting your SMSF service providers to see if they have any crypto solutions available within their service and reporting systems. - Maintain good records: Record all transactions, including purchases, sales and transfers of crypto assets. Sales and transfers are classified as ‘disposals’ and may result in capital gains tax (CGT). Keeping good records is essential for calculating CGT. Also, keep information about your wallet and any changes made to it.
- Protect your wallet password: Never share your wallet password with anyone. Store it securely to prevent unauthorised access to your crypto assets.
Make sure that all trustees (directors of corporate trustees) are aware of these passwords or have their own access to all SMSF investment information. - Avoid related party transactions: When transacting in crypto assets with related parties, all transactions must be done at arm’s length.
- Valuation records: Make sure you have proper market valuation records for your auditor.
Source: ATO Website, May 2025.
The bottom line
For the most part, crypto assets do not generate cash flows the way ‘traditional’ assets do, such as dividends from shares and coupon payments from bonds.
Without these cash flows, the main factor driving the valuation of crypto assets will continue to be investor sentiment. In short, how much someone is willing to pay you for a crypto asset you own, based on their belief that they can find someone else to sell it to at a higher price in the future.
As the past has shown, sentiment around crypto assets can be a fickle beast. For this reason, among others, it’s worth seeking independent financial advice from an adviser with expertise in both SMSFs and crypto assets before committing to investing in them.
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