Including SIS Act Requirements and New Digital Asset Laws
Introduction
The inclusion of crypto assets in Self-Managed Superannuation Funds (SMSFs) is gaining momentum as investor interest grows and regulatory frameworks evolve. While digital assets can offer diversification and growth potential, trustees must approach this space with caution and a strong compliance mindset.
Recent ATO data shows SMSFs held around $3.02 billion in digital assets as at June 2025, a significant rise from 2019 levels despite a slight year-on-year decline. Interestingly, smaller funds (under $200,000) allocate a higher proportion—close to 7%—to crypto compared to the overall average of 2%. This trend suggests younger or newer trustees are more willing to explore emerging asset classes. However, enthusiasm should be balanced with governance and risk management.
New Digital Asset Laws to Unlock Innovation & Safeguard Investment
Australia’s Government introduced the Corporations Amendment (Digital Assets Framework) Bill 2025 in a joint media release by The Hon Dr Daniel Mulino MP, Minister for Financial Services and Treasurer Chalmers. Its purpose is to support innovation while ensuring investor protection in the digital asset space. Including:
Creates two regulated categories: Digital Asset Platforms (DAPs) and Tokenised Custody Platforms (TCPs).
Platforms must hold an Australian Financial Services Licence (AFSL).
Consumer protections include transparency, governance and dispute resolution.
Exemptions for small operators under $5,000 per client or $10M annual volume. Small operators in Australia who hold less than $5,000 per client and process under $10 million annually are not required to obtain an AFSL, though this changes immediately if either threshold is exceeded; however, all operators must still register with AUSTRAC and comply with AML/CTF obligations, even when operating below these limits.
Strategic benefit: Supports tokenisation and innovation while closing regulatory gaps.
Crypto is treated like any other asset under super law. The following provisions must be satisfied when an SMSF invests in digital assets:
Section 52B – Trustee Covenants: Act honestly, with care and diligence, in the best financial interests of members; keep fund assets separate; maintain and review an investment strategy considering risk, diversification, liquidity and liabilities.
Regulation 4.09 – Investment Strategy: Must consider risk/return, diversification, liquidity, ability to discharge liabilities and insurance needs.
Section 109 – Arm’s-Length Dealings: Investments must be made and maintained on arm’s-length terms; if not, terms cannot be more favourable than arm’s-length.
Section 66 – Acquisitions from Related Parties: Trustees must not acquire assets from related parties except for permitted cases (e.g., listed securities at market value, business real property).
Regulation 8.02B – Market Valuation: All assets must be valued at market value when preparing annual accounts and statements.
Section 10(1) – Market Value Definition: Price agreed between knowledgeable, willing buyer and seller in an arm’s-length transaction after proper marketing.
Section 104A – Trustee Declaration: New trustees must sign a declaration acknowledging duties within 21 days and retain it for 10 years.
ATO Compliance Expectations
Ownership: The wallet must be in the SMSF’s name, not a personal account.
Record-Keeping: Maintain detailed transaction records for purchases, sales and transfers.
Valuation: Report crypto at market value using reliable sources (e.g., 30 June prices from reputable exchanges).
Security: Protect private keys and passwords against loss or cyber threats.
Auditor Focus Areas
Fund Documentation: Does the trust deed and investment strategy allow crypto?
Ownership & Valuation: Are assets held in the fund’s name and valued correctly?
Evidence: Screenshots aren’t enough—auditors expect verifiable exchange data or custodian reports.
Additional Issues SMSF Portfolios Must Consider
Liquidity & Volatility: Crypto prices fluctuate significantly. Trustees must assess whether the fund can meet pension payments and other obligations during downturns.
Regulatory Risk: Using unregulated exchanges or failing AML/CTF obligations can lead to compliance breaches.
Custody Decisions: Platform custody offers convenience and audit-ready reporting but requires trust in the provider. Self-custody gives control but introduces risks of key loss or theft.
Tax Implications: Crypto is subject to CGT. Accurate records and avoiding related-party transactions are essential.
Succession Planning: If one trustee controls wallet access, incapacity or death could lock the fund out of its assets. Document access procedures and consider professional custodians.
Cost & Complexity: Crypto investments often increase administration and audit costs. Trustees should weigh these against potential returns.
Strategic Approach
Update the trust deed and investment strategy.
Implement strong security and record-keeping.
Plan for continuity and succession.
Seek professional advice to align with long-term retirement goals.
