Money Self-managed super funds warned over cryptocurrency lure

21:42  09 february  2018
21:42  09 february  2018 Source:   msn.com

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Self - managed super funds warned over cryptocurrency lure ABC Online. Full coverage.

There are calls for tighter regulatory controls of the superannuation industry, with reports more and more self - managed super funds are turning to volatile cryptocurrencies .

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over cryptocurrency lure Updated February 08, 2018 16:35:55 There are calls for tighter regulatory controls of the superannuation industry, with reports more and more self - managed super funds 5:20 Russian Legislators Draft Bill To Outlaw Cryptocurrency As Money: The "money Surrogate Bill" 2:24

Paul Keating has warned that borrowing for property via a self - managed super fund represents an “accident down the road.” The Former Prime Minister claims that the measure allows super funds to get into debt, lured by the often false hope of a future dividend down the track.

There are calls for tighter regulatory controls of the superannuation industry, with reports more and more self-managed super funds (SMSF) are turning to volatile cryptocurrencies.

These "virtual coins" operate within a largely unregulated environment, have no physical form, and are not typically backed by a tangible asset.

Melbourne massage therapist turned fairy floss distributor Nathan Marshal operates his own self-managed super fund.

Late last year he decided to invest 100 per cent of his superannuation in cryptocurrency.

So far the move has paid off, with his portfolio growing a whopping 600 per cent — even after widely reported plunges on crypto markets this year.

"At my age I kind of figured I need to take some bigger risks," Mr Marshall said.

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Self - managed funds must demonstrate to their auditor that they have clear legal ownership of Bitcoin. or any other cryptocurrency , in a market where the assets are kept anonymously. The specialist in Deloitte Bitcoin Richard Miller warns that over time liquidity could become a problem a with Bitcoin.

"Being self-employed, I haven't really been pumping any money into it. It's tough enough with the rent and the bills.

"So I thought, you know, why not do this? Why not throw the super in?"

Mr Marshall said there was a strong feeling among the Australian crypto community that regulatory authorities have been caught off guard by the recent surge in popularity of online currencies — with the "rules" for investing super not entirely clear.

"To me it sounds very much like share trading, if you sell within a year you're going to attract a large chunk of capital gains tax.

"That's the big topic of conversation at the moment between all us investors —what are the tax implications, what's going to happen?

"There are a lot of people who have been doing a lot of trading, and making a lot of money, and tax is definitely a big concern for all of us."

Under current superannuation regulations, SMSFs in Australia are able to invest in cryptocurrency assets — such as bitcoin, ethereum and litecoin — so long as their normal obligations as a trustee are satisfied.

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Self Managed Super Funds operate in a highly regulated space so there are many key areas that need to be considered if you wish to hold cryptocurrency in an SMSF. The Property Investor is launching a new online service showcasing outstanding properties from all over the world.

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a close up of a device © Provided by ABC Business In effect, if the fund's Trust Deed allows for, and recognises, the risks of crypto assets, the virtual coins are purchased and stored in accordance with the relevant legislation, and no personal gain is garnered by the asset, then the investment is legitimate.

But industry leaders say given so much cryptocurrency investment is speculative by nature, it is hard to see how any such asset could be considered consistent with a responsible super investment strategy.

Self-Managed Super Fund Association chief executive officer John Maroney has warned SMSF trustees to tread carefully.

"All superannuation funds, including self-managed super funds, need to be for genuine retirement purposes," he said.

"And that generally mitigates against investing in speculative assets that may disappear entirely.

"There's certainly the amount of volatility in the market. Quite a lot of the cryptocurrencies have gone down 40, 50 and 60 per cent in recent weeks and months — that is a clear indicator that it's volatile.

According to Mr Maroney, regulatory standards do require SMSFs to hold a diversified portfolio.

"There's no specific regulation but the general regulation that governs all investment activities of the fund comes into play," he said.

"It would be difficult to show that this is a good, genuine way of structuring your portfolio for retirement purposes. It would look far too speculative."

Should you invest in a cryptocurrency? .
Should they invest their own hard-earned money, and which cryptocurrency will get them a Lamborghini/yacht/island quickest? The simple answer to both those questions is not only am I not an expert in the field just yet, but more so that no one in the industry is an expert.The fact of the matter is that there’s almost no one in the entire industry whose career spans more than five years, let alone a lifetime’s work.Ad there is literally not a single person that can claim decades of experience and knowledge purely because Bitcoin itself is only just marking its tenth birthday.

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