Advisers would be wise to arm themselves with a library of reputable sources to respond to client emails about bitcoin and its potential dangers, an SMSF specialist believes.
With no specific rules preventing SMSFs from investing in bitcoin, the Australian Taxation Office is urging trustees to seek professional advice before investing in the cryptocurrency.
The ATO said bitcoin could make compliance with regulatory rules and restrictions that apply to SMSF investments “more complex or difficult”.
“For example, the requirement that the fund’s assets are managed separately from the member’s personal and business assets and ensuring that the SMSF has clear legal ownership of the bitcoin or relevant cryptocurrency, as well as ensuring that the investment is appropriately valued for both accounting and taxation purposes,” a spokeswoman said.
As with any SMSF investment, it must comply with the fund’s investment strategy, she added.
It follows warnings from both Reserve Bank and Australian Securities and Investments Commission in a week where the cryptocurrency was trading at almost $16,000 USD.
At Professional Planner’s Research Forum last week, a panelist shared an anecdote of a client asking for advice about how to transfer his wife’s super balance to bitcoin.
Other advisers have reported an increase in client inquiries and demand for more information.
Liam Shorte, an SMSF specialist adviser with Verante Financial Planning, said he has been inundated with inquiries and has told clients to exercise caution around the cryptocurrency.
“I plead with them not to put much in anything like cryptocurrencies and be prepared to lose the lot if it goes wrong,” he said.
His suggestion to other advisers is to have an email at the ready to point to sources of information about bitcoin. “Otherwise you repeat yourself hundreds of times and your risk people thinking or claiming you recommended the investment,” he said.
“They should look international and locally as from feedback it can be hard to use overseas bitcoin exchanges in proving identity and bank accounts.”