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Cryptocurrency Emerges as the Fastest-Growing Asset Class

As per CoinTelegraph reports, Australians are increasingly looking towards cryptocurrency to enhance their retirement savings. Over the past four years, allocations from self-managed pension funds have surged by 400%, surpassing the growth rates witnessed in stocks and bonds.

Cryptocurrency coins stacked in one another

Data obtained from the Australian Tax Office (ATO) for the September quarter reveals that approximately 612,000 self-managed super funds (SMSFs) currently possess a collective $658.6 million (992 million Australian dollars) in cryptocurrencies. This demonstrates a significant increase from the same period in 2019, when holdings were just under $131.5 million (198 million Australian dollars).

Self-managed super funds in Australia, also known as private superannuation funds, enable individuals to oversee their retirement investments. Despite this autonomy, the Australian Tax Office oversees the retirement scheme, ensuring compliance with superannuation laws.

Danny Talwar, Koinly’s head of tax, informed Cointelegraph that this trend positions cryptocurrency as the “fastest-growing asset class in SMSFs.”

In contrast, although listed shares remained the primary category for SMSF allocations in the previous quarter, they experienced a growth rate of 28% over the same period. Conversely, allocations towards debt securities such as bonds decreased by 5.8% over four years.

However, despite the overall growth of cryptocurrency, total SMSF allocations to crypto experienced a slight 0.8% decline from the quarter ending June 2023 and a 2.4% drop compared to the previous year.

Nevertheless, the holdings of cryptocurrencies in self-managed funds have decreased by 38% compared to the peak of nearly $1.06 billion (1.6 billion Australian dollars) in the quarter ending June 2021 during the previous crypto bull market.

Despite this decline, Talwar highlighted that crypto constituted only 0.1% of the total net assets held in Australian SMSFs by the end of the last quarter. He noted a trend where smaller-sized SMSFs tended to allocate more to cryptocurrencies in their portfolios.

According to Talwar, the inclusion of crypto within a super fund is becoming increasingly prevalent, with local crypto exchanges offering crypto-based superannuation products on the rise. However, he cautioned about the stricter regulations governing crypto holdings in super funds, emphasizing the importance of compliance with SMSF strategies and retirement benefit regulations.

“People want to hold crypto in their super, but there are stricter rules around it,” Talwar warned.

“Your SMSF strategy must permit holding crypto, solely for providing retirement benefits. Auditing everything is necessary. Segregating SMSF holdings from personal ones is crucial; there should be a clear line between the two.”

Specific details about cryptocurrencies held within SMSFs and their gains or losses remain undisclosed, as the ATO does not provide information on portfolio holdings or performance.

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