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With cryptocurrency officially moving into the mainstream, more and more people are moving some of their Superannuation wealth into this rapidly evolving and growing class of assets. Self Managed Super Funds (SMSF) were first introduced in 1999. Since then, they have proven to be a popular choice among investors who want to diversify their portfolios in line with their own ideals for investment. It’s now possible to use an SMSF to invest in crypto, but there are several factors that are worth being aware of before you get started. Here are some of the top things to consider before you begin.
Understanding Cryptocurrency
First, it’s important to understand the basics of cryptocurrencies such as Bitcoin and the technologies behind them. Bitcoin and other cryptocurrencies are considered to be digital currencies and they can be used for various things such as a store of wealth or online payment. Since cryptocurrencies work on a peer-to-peer system, there is no central authority overseeing them. All transactions and balances are stored on an online ledger known as blockchain. Due to the ability of cryptocurrencies to disrupt the traditional financial markets, it is unique.
SMSF Considerations
If you want to invest in crypto using an SMSF, there are several things that are worth considering before you get started. First of all, the trust deed of your fund will need to allow for the purchase, and the purchase will need to be in accordance with the investment strategy set out by your fund. All regulatory requirements should be complied with. SMSF holders should also make sure that the SMSF is maintained solely for retirement funding purposes, preventing benefits outside of that from being derived from it, as part of the trading strategy.
Setting up an SMSF Cryptocurrency Account
There are several things that you will need before opening NGS’s Self Managed Super Funds (SMSF) for cryptocurrency. A copy of your trust deed and proof of the trustees, an ID for all the beneficial owners, and the trust bank account details are usually the main things that will be required for you to open an SMSF. Your details will then be verified against the official government sources to ensure that the account is compliant. Once this has been cleared, you will be able to start using your account for trading.
Keeping Your Cryptocurrency Secure
Ensuring that your cryptocurrency is secure is vital, particularly when you will be investing in larger figures, which is typically the case with an SMSF. There are several factors that are important to focus on when it comes to security including ensuring that you are using strong passwords or passphrases that are at least twelve characters. Be sure to create and securely store a backup password phrase to your crypto wallet, and follow cybersecurity best practices including not allowing others to access your devices remotely and only clicking on email links that you are sure are secure.
Cryptocurrency is starting to become an increasingly popular option for those looking to add more diversity to their SMSF investments.
