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Self-managed funds are transferred to Bitcoin

Financial advisor Liam Shorte asks more than 20 questions a day to investors who plan to join the Bitcoin party. Many wonder if they can buy at the crytocurrency using a self-managed retirement fund.

"At the moment, there is fear of getting lost, there are people who have told me that they want a stable income in retirement and are now looking for Bitcoin," says Shorte.

Perhaps no one should be surprised that advisers and accountants receive a greater number of calls from potential investors. Bitcoin exceeded USD16,000 in operations in the US UU On Thursday, rising more than $ USD3000 in a single day and this week Saxo Bank predicted that Bitcoin could reach a peak of more than $ USD60,000 in 2018, with a market capitalization of more than $ US1 trillion.

"It seems that people have moved from ownership to Bitcoin," Shorte says, adding that much of the interest comes from savers between the ages of 20 and 40, most of them men. Many are attracted by the possibility of exchanging fractions of Bitcoins.

Professional services firm Deloitte is also seeing an increase in queries from Bitcoin trustees.

"We are definitely seeing an increase in the number of people who want to enter," says Taralyn Elliott, a partner in Deloitte's audit and assurance practice.

"I anticipate that the number of self-managed super funds that invest in these assets will increase, depending on the level of consultations they are receiving from the trustees and their advisors," adds his colleague Jo Heighway, a self-managed fund specialist in audit in the signature Of the 16,000 self-managed super-funds audited annually by Deloitte, less than 50 currently have Bitcoin.

There is good news and bad news for investors who want to buy Bitcoins in their self-managed fund. The good news is that under the rules of the Tax Office, you are allowed to do so. But, warns an ATO spokesperson: "The nature of Bitcoin or other cryptocurrencies may mean that compliance with regulatory rules and restrictions that apply to all self-managed fund investments is more complex or difficult."

Heighway says the requirement for itself – managed funds that will be audited annually could encourage some investors to buy Bitcoins in their personal name.

For those who want to go the DIY route, Heighway says they should verify that the trust deed of the fund allows such investments, While the investment strategy of the fund should be updated to specifically include the asset class. Then there is the question of ownership and valuation. All investments in a do-it-yourself scheme should be made on behalf of the fund and not the personal name of an investor, which in the case of Bitcoin is easier said than done.

"We see trustees who are struggling to get property registered in the name of their fund," says Heighway.

This is because not all so-called wallet providers, which act as a bank account for Bitcoins, allow investors to register the wallet in anything other than their personal name. Coinspot is an Australian site that allows self-managed funds to register an account. Bullion gold and silver, and now cryptocurrency, the runner Ainslie Bullion is another. In other cases, self-managed fund management platforms are promoting Bitcoin services. Mysmsf is a specialized provider of super-services properties that has branched into cryptocurrencies, though it points to the administrators of Ainslie Bullion as the wallet provider.

Self-managed funds must demonstrate to their auditor that they have clear legal ownership of Bitcoin. or any other cryptocurrency, in a market where the assets are kept anonymously. In order to verify the property in a definitive way, the auditor will need to access blockchain and understand how to audit blockchain-based assets. These auditors are few and far between (Deloitte is one). There is a high probability that auditors who do not have this experience will only issue a qualified report.

Another problem is the valuation of cryptocurrencies. Increasingly, different quotes for Bitcoins are offered, so auditors should ensure that the ratings are correct.

Trustees of self-managed funds should also know the consequences of maintaining highly volatile assets in the transfer balance of $ 1.6 million. cap. "This refers to the maximum amount of money that can be placed in a tax-free super pension and has several implications, such as acting as a threshold after which you can no longer make super-contributions after taxes. pronounced in Bitcoin could mean that managers involuntarily activate the limit.

"If there are significant gains, there could be complexities," Heighway says. "If self-managed funds are the right place to keep Bitcoins, it's a matter," he adds. 19659002] The ATO spokesperson says: "The ATO strongly encourages managers of self-managed funds to seek independent professional advice before undertaking any new investment in their fund, including investments in bitcoin and other cryptocurrencies."

The specialist in Deloitte Bitcoin Richard Miller warns that over time liquidity could become a problem a with Bitcoin. It is expected that the number of bitcoins created will have a limit of 21 million, and the speed at which they are created is slowing down. If investors prevail in the market, the number in constant circulation could fall. "The challenge is that the more people buy for investment purposes, the less liquid Bitcoin becomes," says Miller.

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