ASIC issues warning to SMSFs on cryptocurrencies
With consumers and SMSFs increasingly being targeted with marketing to invest in crypto-assets, ASIC has issued a warning urging SMSFs to consider the risks of these investments.
In a public statement this week, ASIC said it had noticed an increase in marketing recommending Australians switch from retail and industry superannuation funds to SMSFs so that they can “invest in a high return portfolio”.
The corporate regulator said SMSF trustees are also being targeted to invest in crypto-assets.
Australians who decide to self-manage their super, ASIC said, should consider the risks before using their SMSF to invest in these types of investments.
“As the trustee of your SMSF, you ultimately bear responsibility for the fund’s decisions and for complying with the law even if you rely on other people’s advice – licensed or otherwise,” ASIC stated.
“If you decide to set up an SMSF, you should seek professional advice to determine what investments to make. There are rules governing investments the SMSF can make and taxation consequences for investments, including cryptocurrencies. Any investment must be permitted under the fund’s trust deed and be in accordance with the fund’s investment strategy.”
When developing and reviewing an investment strategy, ASIC sad SMSF trustees need to document how their fund’s investments will meet their retirement goals having regard to diversification, the risks of inadequate diversification, liquidity and the ability of the fund to discharge its liabilities.
“You must also be able to demonstrate that the fund owns the asset. The ATO website contains information about these obligations. A licensed financial adviser can assist you with formulating an appropriate investment strategy,” ASIC explained.
ASIC said it is also important that consumers consider the risks before setting up an SMSF.
“Setting up an SMSF is one of the most significant decisions you can make relating to your retirement savings,” it said.
“Before making the decision to set up an SMSF, seek advice from a licensed financial adviser. Do not rely on social media ads or online contact from someone promoting an ‘investment opportunity’.”
ASIC said consumers should also be wary of people “cold calling”, text messaging, or emailing with a recommendation to transfer their super to an SMSF or invest in crypto-assets via their SMSF.
The corporate regulator noted that it has already made moves to shut down one unlicensed financial services business encouraging SMSFs to buy crypto-assets.
In November last year, ASIC obtained interim orders and injunctions from the Federal Court in Queensland against A One Multi, a Gold Coast-based company and its directors Aryn Hala and Heidi Walters.
ASIC alleges that Mr Hala represented to investors that he could help them invest their superannuation in an SMSF, and then loan the money in their SMSF to A One Multi. ASIC also alleges Mr Hala told investors that they would receive annual investment returns of over 20 per cent.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.