Australians are increasingly turning to cryptocurrency as a means to secure a prosperous retirement, as self-managed retirement funds show a remarkable 400% surge in cryptocurrency allocation over just four years, outpacing the growth rate of traditional stocks and bonds.
Statistics released by the Australian Tax Office (ATO) on November 26 reveal that, as of the quarter ending in September, the nearly 612,000 self-managed super funds (SMSFs) collectively hold approximately $658.6 million (992 million Australian dollars) worth of cryptocurrencies.
This figure marks a staggering 400% increase from the same quarter in 2019 when crypto holdings stood at just under $131.5 million (198 million AU).
In Australia, self-managed super funds, also referred to as private superannuation funds, empower individuals to manage and invest their retirement funds autonomously.
The ATO oversees this retirement scheme, ensuring compliance with superannuation laws.
Danny Talwar, Head of Tax at crypto tax provider Koinly, described crypto as the “largest growing asset class in SMSFs.”
In contrast, listed shares, which constitute the largest allocation category in SMSFs, grew by 28% during the same period, while allocations to debt securities like bonds declined by 5.8% over the past four years.
Despite this remarkable growth, total SMSF allocations to cryptocurrency saw a slight 0.8% dip from the quarter ending in June 2023, along with a 2.4% drop compared to the previous year.
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It’s worth noting that the current amount of crypto held within self-managed funds is still 38% lower than the all-time high of nearly $1.06 billion (1.6 billion AU) recorded in the quarter ending June 2021 during the previous crypto bull market.
Talwar highlighted that cryptocurrency accounts for only 0.1% of the total net assets held in Australian SMSFs at the end of the last quarter.
He also pointed out that smaller-sized SMSFs tend to have a larger allocation to cryptocurrencies in their portfolios.
The trend of holding crypto within super funds is on the rise, with local crypto exchanges offering crypto superannuation products.
However, Talwar cautioned that certain rules and regulations must be followed, emphasizing that the SMSF strategy should be geared toward providing a retirement benefit.
Compliance, audits, and clear separation of SMSF holdings from personal holdings are crucial to avoid complications.
Unfortunately, specific details about the cryptocurrencies held by SMSFs and their gains or losses remain unknown, as the ATO does not provide information on portfolio holdings or performance.
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