ASIC has warned of an increase in offers to switch from retail or industry super funds into SMSFs with the promise of ‘high return’ crypto-asset investments, with consumers being told to seek input from a financial adviser before transferring from a regulated fund to an SMSF.

After the regulator sent out recent missives alerting consumers to scams involving crypto-assets, it noted many of the schemes are now targeting superannuants – especially via social media.

“Before making the decision to set up an SMSF, seek advice from a licensed financial adviser,” the regulator stated in a release. “Do not rely on social media ads or online contact from someone promoting an ‘investment opportunity’.”

Superannuation is a special area of interest for ASIC when it comes to crypto due to the amount of wealth invested – which attracts nefarious interest – and because of its role, together with APRA, in policing trustees’ adherance to their investment responsibilities.

SMSF fund trustees bear “ultimate responsibility” for the fund’s decisions, ASIC warned SMSF holders or potential trustees, even if the trustee is under advice. Investments in crypto-assets are not only high-risk, ASIC said, but may be a contravention of an SMSF’s trust deed.

“There are rules governing investments the SMSF can make and taxation consequences for investments, including cryptocurrencies,” ASIC stated. “Any investment must be permitted under the fund’s trust deed and be in accordance with the fund’s investment strategy.

“When developing and reviewing your investment strategy you need to document how your fund’s investments will meet your retirement goals having regard to diversification, the risks of inadequate diversification, liquidity and the ability of the fund to discharge its liabilities. You must also be able to demonstrate that the fund owns the asset.”

Getting a grip on crypto

The warning comes on the back of ASIC detailing just how difficult it is to keep track of crypto activity, with the “nature, size, and scale of the crypto-asset market activity” proving elusive.

“The crypto space is a big space, and it’s generally unregulated by ASIC,” chair Joe Longo said at a PJC hearing in September. “I think there’s quite a bit of policy work ahead of us to get a grip on this space.”

That work evidently paid off, with ASIC able to set ground rules for crypto-asset related investment guidance in November.

As part of the new guidance, ASIC set up a new ‘crypto-asset’ category in the licensing application for entities, which responsible entities wishing to hold underlying crypto-assets must have.

ASIC also underwent a previous consultation (CP343) which looked at crypto-assets as underlying assets for exchange traded and other investment products.

“Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations,” ASIC commissioner, Cathie Armour, said.