How do I invest my SMSF in Cryptocurrency using CoinSpot?
CoinSpot was established in 2013 and has over 530 tradeable cryptocurrencies. CoinSpot is registered with AUSTRAC as a digital currency exchange and thus is an exchange that can be used by Self Managed Super Funds to invest in Cryptocurrencies.
SMSFs are subject to legal oversight through the Superannuation Industry (Supervision) Act 1993 (SIS) and the Superannuation Industry (Supervision) Regulations 1994 (SISR). The super laws require SMSF trustees to ensure a fund is operated to provide retirement benefits for its members and for their beneficiaries on their death.
Trading in cryptocurrencies can be highly volatile and an SMSF trustee has to ensure an investment in crypto aligns with the super laws and the retirement goals of their members.
Due to the explosion of financial theft, fraud and scams the government is fighting back with strict legislation so investors can be confident investing in financial markets. AUSTRAC was established to monitor and enforce actions against reporting entities who do not comply with the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws. These laws were legislated to prevent financial fraud, theft and scams.
Setting up an SMSF bank account
To use CoinSpot, an SMSF needs a bank account to deposit and withdraw funds from its CoinSpot account. Many banks are cautious or restrict SMSFs from crypto exchanges due to rising fraud, so it’s important to confirm your bank’s policy before proceeding. A bank is more open to allowing transactions between an SMSF bank account and a crypto exchange if it is registered with AUSTRAC.
Based on discussions with St George, Australia Bank and ANZ SMSFs can open a transaction account to trade in cryptocurrencies subject to the bank’s policies. Some SMSFs have used NAB, Bendigo Bank, and Heritage Bank for successful crypto transactions. Be aware that banks may impose trading limits or review transactions they consider high risk; issues are sometimes resolved by phone, but unsatisfactory responses can result in cancelled transactions.
The SMSF’s CoinSpot account must be registered in the same name as the associated SMSF bank account i.e. “Johnston Pty Ltd ATF Johnston SMSF”.
SMSF Australia do not endorse any specific bank for crypto trading. Other banks we have not mentioned may facilitate crypto trading. It is crucial to check with your bank.
Do you have an existing SMSF?
If you have an existing SMSF and have a crypto friendly bank account you can proceed to open an account with CoinSpot.
As CoinSpot is registered with AUSTRAC they are required to verify the identity of each SMSF member and the corporate trustee as part of “Know your Customer” (KYC) process. The members must provide ID verification such as a passport or a driver’s license and submit a copy of utility bills, bank statements or other document as evidence of their address. A signed copy of the fund’s trust deed is required as well as other fund and personal details.
A dedicated SMSF email address is also required, along with a photo of each member holding their verification details.
Do you want to set up a new SMSF?
SMSF Australia can assist you to set up a new SMSF. We do not provide advice about whether you should set up an SMSF but can assist you with the process of obtaining a trust deed and corporate trustee as well as registering the fund with the ATO, obtaining an electronic service address (ESA) and other paperwork to comply with SIS laws and regulations.
How can your SMSF access records for tax and audit purposes?
Reports can be generated via a .CSV file or via an Application Programming Interface (API) which allows third parties such as the fund’s accountant or SMSF auditor to read the transaction records, crypto holdings and valuations.
The SMSF auditor has access to evidence to support the holdings, title of the holdings and market valuation of crypto and cash assets held by CoinSpot at 30th June. The detailed transaction records can provide support to ensure there are no related party or other inappropriate transactions. Tax information may be linked to a crypto tax calculator or simply downloaded by the fund’s accountant to be included in the fund’s tax calculations.
Multicoin wallets
CoinSpot offer a multicoin custodial wallet which is managed by CoinSpot. Generally, the exchange uses cold storage to keep the customers private keys secured.
Disclaimer – Coinspot & SMSFs
SMSF Australia does not endorse or suggest any particular cryptocurrency exchange platform. Frequently, clients inquire about SMSF investing in cryptocurrency; therefore, we offer broad guidelines on utilising a crypto platform for such investments.