A specialist auditor has advised SMSF investment strategies must be very specific with regard to cryptocurrency should trustees want to house an allocation to this asset class within the fund.
“Clearly the investment strategy needs refer to crypto as being included [as an asset class in the fund] but I don’t think it’s an ‘other’ asset class. I think it actually should be spelt out in the asset classes that are permitted – cryptocurrency,” Super Sphere director Belinda Aisbett told attendees at her organisation’s latest seminar series held in Sydney last week.
While recognising cryptocurrency as a specific asset class is important, she pointed out from a risk perspective, auditors should insist the unique characteristics of this type of investment are acknowledged.
“What I actually want to see in the strategies is the trustees acknowledging this [asset] is speculative,” Aisbett said.
“Because if it’s in the investment strategy that it is speculative, the trustees can’t then, when they lose half of their super fund balance, turn around and claim: ‘The auditor didn’t tell me this was speculative and I’ve got this other case law that says unsecured loans aren’t ordinary, so of course cryptocurrency is not ordinary and thus my auditor has failed in their duty of care.’
“If you’ve got that investment strategy to say this is speculative, the trustees have to wear some of the risk.”
She outlined the alternative risk mitigation strategy she implements should the trustees in question reject describing cryptocurrency as a speculative investment in the investment strategy.
“What I do if the strategy doesn’t say cryptocurrency is speculative, is to get the trustees to sign a minute saying: ‘The auditor has raised queries about the investment strategy and the fact that we have invested in cryptocurrency. We acknowledge this is a speculative investment,’” she said.
“I want that in the file to protect me.”
