- Cryptocurrency trading can have huge returns, but the losses could be equally large
- Volatility, being sued by other fund members, and scams are big risks to consider before investing in crypto with your SMSF.
- You'll need to first make sure your trust deed is worded to allow crypto trading, and then that any transactions meet the sole purpose and arms length tests.
Cryptocurrency is an increasingly popular investment choice, particularly for younger Australians. A decade ago it was still on the fringes, but the undeniable growth of the price of Bitcoin and other emerging cryptocurrencies over the past few years mean it's now taken much more seriously in investing circles. Some Australians even now choose to hold crypto assets in their SMSF. But is that really a sensible idea?
What are the risks of SMSF crypto investing?
Volatility
One of the biggest issues with cryptocurrency investing is how intensely volatile the price of assets like Bitcoin or Ethereum can be. For example, during the two weeks following the reelection of President Trump in 2024 the price of Bitcoin went up about 35%, while over the first fortnight of November 2025 it dropped more than 22%.
Particularly if there are fund members nearing retirement age, holding crypto assets in SMSF can run the risk of a dramatic price drop significantly shrinking the investment in the near term.
You might get sued
There is also the very real possibility of being sued as a trustee by your other members.
An SMSF can have up to six members, increased from four in July 2021.
Beware of crypto cowboys and scams
The Australian Securities and Investments Commission (ASIC) says SMSF trustees should be wary of scammers and other 'cowboy' investment firms.
"Do not rely on social media ads or online contact from someone promoting an 'investment opportunity'. Be wary of people cold-calling, text-messaging, or emailing you with a recommendation to transfer your super to an SMSF, or invest in crypto-assets via your SMSF,"
-ASIC release in 2022
ASIC also says investors should make sure any investment advisers have an Australian Financial Services (AFS) licence.
What to do before investing in crypto through your SMSF
There’s a few hoops you need to jump through, like any investment, before tying a crypto wallet to your SMSF.
Trust deeds
The first port of call is getting the trust deed up to date, according to Mr Chapman.
"Trustees should ensure that the SMSF trust deed is worded in such a way as to permit this kind of investment," he said.
"Whilst many newer funds may have this power written into the trust deed, many older funds - that long pre-date the development of cryptocurrencies - may not have it meaning that it may be necessary to vary the fund rules before proceeding with the investment."
Meet 'sole purpose and 'at arm’s length' tests
An SMSF must be maintained for the 'sole purpose' of providing death or retirement benefits to members. That means crypto assets need to be held by the fund, not in your own name, and kept separate from personal assets.
You'll also need to make sure any transactions you make with a 'related party' - someone you have a preexisting relationship with - meet the 'arms length' test. If the fund is to sell or buy crypto assets from a party known to the trustee or beneficiaries, it must be at market value, as if the party isn't known. The ATO recommends avoiding altogether related party transactions when it comes to crypto.
ATO tips for crypto investing in SMSF
- Name your wallet correctly
- Keep your personal crypto investments separate from those held by the SMSF
- Use legitimate trading platforms
- Protect your wallet password
- Avoid related party transactions (makes arms length rules easier)
- Keep proper market valuation records
Investment strategy and valuation
The third is ensuring the investment strategy is up to date and accurate.
"It is essential to continually monitor the value of cryptocurrency investments to ensure that relevant superannuation caps are not breached," Mr Chapman said.
"For example, a sudden rise in the value of the crypto could lead to the member's total superannuation balance exceeding the total superannuation balance cap, which can lead to a member not being able to make any further non-concessional contributions to the fund."
For the 25/26 financial year the transfer balance cap was $2 million
"SMSFs must also ensure their investments in cryptocurrency are valued in accordance with ATO valuation guidelines. The value in Australian dollars will be the fair market value which can be obtained from a reputable digital currency exchange or website that publishes its rates publicly," Mr Chapman continued.
"The value of cryptocurrency can change constantly. For the purpose of calculating member balances at 30 June, the ATO will accept the 30 June closing value published on the website of a cryptocurrency exchange that reports on historical cryptocurrency values."
