If you’re a long-term HODLer who’s convinced that owning Bitcoin is your ticket to future wealth, maybe you’ve thought about investing in crypto with your super?
Currently, the only way to include crypto assets in your retirement nest egg is to set up a self-managed superannuation fund (SMSF). A major drawcard of SMSFs has always been greater control over the assets you invest in. Today, that legally includes cryptocurrencies.
But as the saying goes, with great power comes great responsibility. Running an SMSF takes some work to adhere to complex superannuation regulations. Read on to learn how to use your super to invest in crypto the smart and legal way.
Can You Hold Cryptocurrency in an SMSF?
Yes, SMSFs can invest in almost any asset, including Bitcoin and other cryptocurrencies, as long as:
- The assets are purchased and held in compliance with superannuation regulations, especially the sole purpose test, which means the assets are solely held to provide retirement benefits.
- It’s allowed in your SMSF’s trust deed (the legal document that defines the rules of what can be invested in) and is in line with the risk-return ethos of your fund’s investment strategy.
A core tenet of SMSFs is that your investment portfolio must be for the sole purpose of generating wealth for members once they retire. You’ll get in trouble for making investments that give you a personal financial benefit in the short-term, or accessing your SMSF funds early, or using assets held by the fund for personal use.
So, even if all your tokens moon, you can’t access those gains before retirement age. You can close an SMSF, but you’ll have to transfer the benefits to another complying super fund if you don’t meet legal conditions to access your super — such as turning 65 years old.
Keeping your SMSF and personal crypto investments separate is also critical. You’ll need to have a separate digital wallet (via a crypto exchange) that is registered in the name of your SMSF, and/or store your SMSF crypto assets in a separate cold wallet offline.
Precise record-keeping is another must, because your SMSF will need to lodge a tax return annually. Crypto assets you hold as an investment are classified as assets that are subject to capital gains tax (CGT) rules enforced by the Australian Tax Office (ATO).
Trading frequency should be guided by your fund’s investment strategy, and every transaction should be noted. Any time you sell, swap, or convert tokens it is considered a ‘disposal’ of an asset under CGT laws, which means it may result in a net capital gain that you’ll need to account for, to help determine your tax owed.
Why Australians Are Using SMSFs to Buy Crypto
Increased regulation and institutional investment has made crypto a more stable investment option for long-term horizons — especially credible and highly liquid coins like Bitcoin, Ether, and XRP.
But not many SMSFs have diversified their holdings with crypto yet. As of March 2025, Australian SMSFs held over $1.67 billion worth of crypto assets. While that’s just 0.17% of the total amount of assets held by self-managed funds ($968.66b), the percentage of crypto held by SMSFs has increased since 2020-21.
Larger SMSFs tend to focus on listed shares, cash and term deposits, trusts and property — most funds with balances over $500K hold less than 1% crypto.
SMSFs holding a higher percentage of crypto assets tend to have a smaller total fund size — usually below $200K. The ATO’s stats also show new SMSFs are now more likely to be established by Aussies aged below 50 years old (whereas over 70% of SMSF members are 50+).
That seems to indicate that crypto investments are rising mostly due to a younger, crypto-savvy demographic embracing the flexibility and control that SMSFs offer.
Benefits of Holding Crypto in Your SMSF
If you’re extremely bullish about the growth prospects of specific tokens over the next 30-40 years, it’s good to know you can tailor your investments within your SMSF to capitalise. That’s just not possible with other regulated Australian super funds.
Other pros of holding crypto within your SMSF can include:
- Effective tax management, given that SMSFs qualify for a concessional tax rate of 15%. Compliant SMSFs also get a 33.33% discount on CGT owed if the relevant asset has been owned for at least 12 months.
- Potentially lower operating costs, compared to a regular fund. Most operational costs (like professional advice, audits, fees, and software) are fixed — so they become proportionally smaller as your fund’s value grows.
- The ability to pool your super with other people, like your partner or family members. Your SMSF can cover up to six members/trustees. That can make it easier to grow the fund’s size faster and further reduce admin costs.
Risks of Holding Crypto in Your SMSF
Some inherent cons of crypto as an asset that might make you think twice:
- High market volatility. Even BTC’s price moves up and down regularly, putting your retirement income at risk.
- Evolving regulatory landscape. Regulators could change how they treat crypto assets in future.
- A target for scammers. You need to be clued-in to avoid phishing and wallet scams designed to steal your crypto.
Keep in mind, a smaller SMSF will usually be less cost-effective. Freedom to invest in crypto is one thing — but make sure an SMSF is the best move for your financial future. Guidance from experts finds $200K is the minimum threshold for a SMSF where the returns justify the operating expenses.
Cost-effectiveness of an SMSF also depends on your fund’s actual performance, and how much of the admin and managing of investments you take on personally. Paying for professional help is usually unavoidable, plus there’s a slew of annual costs (ATO SMSF supervisory levy, independent audit fee, bank account fees, and preparation of financial statements and tax returns).
Another major risk is not having the knowledge or skill needed to choose the right crypto investments and manage them well. If you’re prone to FOMO or panic selling, making sensible decisions about retirement funds could be too much pressure.
Meeting your SMSF compliance responsibilities also requires time and attention to detail. Even if you get external advice or support, as a trustee you’re ultimately accountable for the fund’s performance and any errors.
How to Set Up a Crypto SMSF
Step-by-step, here’s how you set up your crypto SMSF:
- Choose an SMSF structure either composed of individual trustees or a corporate trustee, then appoint your trustees and provide their details to the ATO.
- Establish the fund’s trust deed and ensure it allows for crypto investments. You can buy kits online but it’s best to engage a legal professional to make sure it’s above board.
- Register your SMSF with the ATO. You’ll do this by applying for an Australian Business Number (ABN) and a tax file number (TFN) for your SMSF.
- Open an SMSF bank account so you can start accepting member contributions, transfer your previous super balance if needed, and have a place to receive investment income.
- Register for an electronic service address (ESA) through a messaging provider to receive member’s employer super contributions.
- Create a written investment strategy that describes your plan for holding and selling crypto (and other assets you plan to invest in) consistently with your funds objectives and retirement goals. It’s essential your plan considers the risk and likely returns from investments.
- Choose a reputable digital assets exchange that supports SMSF structures and sign-up for an SMSF account using your registered details, including verifying your identity and linking the account to your SMSF bank account.
If you choose to engage an SMSF administration firm/adviser/platform, they’ll help you handle many of these steps. It also pays to speak with a licensed financial adviser to ensure your investment strategy meets SMSF guidelines and gives you the best chance of success.
Best Crypto Exchanges for SMSF Investors in Australia
Creating an SMSF account on a digital exchange is necessary to trade crypto assets and execute your fund’s investment strategy.
But which exchange is best for crypto SMSFs? It’s wise to select an exchange that is established and offers local support. But also look into its transaction fees and which crypto assets it supports.
Leading exchanges used by Aussies, which support SMSF accounts, include:
- Swyftx: Australian-based, great knowledge base and considered user-friendly.
- CoinJar: Long-standing, secure Aussie exchange, but it’s limited to 60+ coins.
- Independent Reserve: A trusted Australian exchange, detailed reporting for SMSFs.
- CoinSpot: Popular, Australian-based and with over 530 cryptos available to trade.
How to Buy Bitcoin Via Your SMSF Account on a Crypto Exchange
The actual crypto trading process from your SMSF account will look and feel the same as buying and selling crypto for personal investments. You’ll simply need to:
- Transfer money from your SMSF bank account to the SMSF account on the exchange.
- Select the amount of crypto to buy/sell, check that you’re happy with the price, and execute your order.
Many experts argue it’s wise to immediately transfer your assets from your hot wallet (online account) to an offline hardware device (called a cold wallet) with a private key that you directly control. Remember to use a cold wallet that is dedicated solely for your SMSF’s crypto holdings.
Ongoing SMSF Compliance for Crypto Investments
In addition to annual audits and tax returns, to stay compliant you’ll need to regularly review and update your trust deed and investment strategy. Especially if market conditions or risk appetites change in a way that means investing in crypto, or specific assets, no longer supports your dreams of a cushy retirement.
An important consideration for SMSFs investing in crypto is that auditors need to verify the accuracy of your financial statements. You’ll need to be able to provide a record of your transactions and wallet balances, and possibly sign a declaration to prove ownership of crypto held in a cold wallet.
Is Crypto Right for Your SMSF?
There are steep penalties for SMSF non-compliance, including fines valued in the thousands and potential disqualification from being a trustee. Serious cases can lead to your SMSF losing almost half its assets in tax, or criminal charges and penalties.
So before you decide to invest in crypto through a self-managed super fund, make sure you’re crystal clear about whether:
- You understand, and are prepared for, the costs, time and responsibility involved in managing an SMSF and its investment portfolio.
- You’re confident that crypto assets are an effective way to diversify your SMSF’s holdings, and balance member’s risk-reward preferences.
- You’re experienced and capable enough to safely and sensibly store your crypto and adjust your assets as market conditions change.
Disclaimer: The information is not intended to be financial advice. I am not a financial adviser and this article is designed to provide facts and information of a general nature. It is not intended to imply any recommendation, opinion, or advice about whether an SMSF is right for you, or whether to invest in cryptocurrencies, or any other product. Please do your own research or get independent financial advice that takes your individual situation into account.
