Using your SMSF to invest in crypto currencies

Using your SMSF to invest in crypto currencies,

Whilst Crypto currency is a far cry from the usual investments associated with an SMSF, contrary to popular belief, crypto currency can be an appropriate investment for an SMSF.

Whilst not providing an income in the traditional sense, capital gains are still to be had, which complies with the sole purpose test. However one has to be careful not to be viewed by the ATO as “carrying on a business” of crypto trading as this may cause the SMSF to lose its compliance status.

The key here is to develop an investment strategy and stick to it, which lends itself to more of a buy and hold strategy rather than a “trading approach.”

In order to purchase crypto currency, the first step (assuming your SMSF is already set up by your accountant Melbourne) is to register with a crypto currency exchange which allows purchasing from an SMSF.

Once currency is purchased via the exchange, it is advisable to transfer the funds into a wallet, this removes dependency on the exchange and provides further security to the SMSF (if you are unsure how to transfer the funds into a wallet, please visit your local accounting firm Melbourne to assist).

When opening the wallet for the SMSF please ensure the wallet is under the SMSF’s title and not under a personal titleholder as this would be a breach in SMSF rules and the fund will be deemed non-compliant.

In contrare to common perception, Bitcoin transactions are not invisible, as all prior transactions are saved in a block (hence the wording Blockchain), and auditing the SMSF is not as difficult as it may appear to be, any SMSF trained accountant Melbourne should be able to lodge relevant compliance returns as well as audit the SMSF.

As with all investments, obtaining the correct advice is mandatory (make sure your accountant Melbourne is RG146 compliant or works in conjunction with a financial planner).

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