SMSFs and Cryptocurrency

SMSFs investing in Cryptocurrency. We have had the same questions asked a number of times over the past week – do we need to update our deed to provide for an investment in Cryptocurrency?

Well the answer to this is the same as everything else. First, the technically correct answer, second what you SHOULD do and finally, what will the bank (or in this case auditor) want. Potentially three different answers to the same question. All of them are correct.

First, do you really need to update your deed? Forgetting the fact that you get to charge for it, what does the law actually say.

Section 14 of the Trustee Act 1925 (NSW) states:

A trustee may, unless expressly forbidden by the instrument (if any) creating the trust–

(a) invest trust funds in any form of investment, and

(b) at any time vary any investment.

There are similar provisions in each of the Trustee Acts around the country.

So it is clear from the law that you do not need to amend your deed to allow the trustee to invest in Crypto unless the deed currently prohibits it. I can’t imagine any do.

That said, we are constantly contacted by accountants who say that so and so (either a bank, auditor or financial planner) has contacted them to tell them to get a fund’s deed amended because the deed doesn’t specifically allow a particular investment or insurance. The banks always require the ability to invest in LRBAs for example. (admittedly a deed does need to give the trustee the power to borrow but the banks go further and require the specific investment power – crazy!).

So it would make sense to have the deed updated to include Crypto for no other reason than to appease people who don’t know the law but still have the power to tell you that you don’t comply with it.

Anyway, good luck to all the clients who said crypto was no good at $25,000 but now want to buy in at $52,000. We certainly offer no opinion as to the future of crypto noting that highly qualified people say it is heading to $350,000 and an equivalent number of others saying it will go back to a dollar.

#accountants #SMSF #Cryptocurrency #TrusteeAct1925 #SMSFinvesting #investing