In what appears to be unlawful in Australia, over 18,000 Self Managed Super Funds (SMSFs) invested about 90% of their retirement fund in a particular kind of assets, such as property or cryptocurrency assets.
It is considered inappropriate and illegal under the Australian law to put such a percentage of retirement funds into one asset.
The report today by the local news outlet, Micky highlighted that SMSFs are individuals who take control of their retirement fund investment decisions, instead of outsourcing the management to professionals.
SMSFs, however, contributed a significant growth area for the crypto-related businesses in Australia, giving it amount to about $700 billion (AUS$7 billion) as a combined asset.
However, since the development was dubbed illegal with regards to the country’s rules, the Australian Tax Office (ATO) took a stand by issuing warning letters to the 18,000 SMSFs.
Dana Fleming, the Assistant commissioner at ATO, said the letters were a swift reminder to SMSF owners “of their legal obligations” and “alert them to potential exposure to concentration risk and regulatory breaches.”
The letters, which was also sent to SMSF auditors by the tax authority warn that they have a “duty to comply with legal requirements to adopt investment strategies avoiding risky investments.” Prior to this, it will attract a fine of up to US$2,845 (AUS$4,200).
Despite the development, it is okay to note that Australia has some of the most favorable laws surrounding the investment of retirement funds into crypto assets, as reported.
According to Ajeet Khurana, CEO of Zebpay, a crypto exchange which migrated to Australia due to its favorable laws “Australia happens to be the only developed country where retirement money, superannuation money, can very easily be invested in cryptocurrencies.”
Notably, most of the investment went into a single property asset. However, some SMSFs are now turning to crypto. Following the country’s law, these actions are considered legitimate, as far as they could keep to the 90% rule and never put all their eggs in one basket.
