ATO Shines the Spotlight on Crypto Assets held in SMSF’s

Significance of a Trust Deed Allowing Cryptocurrency Investments

Following recent ATO Advice - an SMSF trustee needs an explicit power in the trust deed to invest in crypto assets because the deed governs what the fund may legally hold and how investments must be managed; without an express power, trustees risk breaching the deed and superannuation law even if members want exposure to crypto. Crypto assets pose specific compliance challenges: they must satisfy the sole purpose test, fit the fund’s documented investment strategy, and be held in the fund’s name with appropriate custody arrangements to keep fund and personal assets strictly separate. Clear deed powers also enable trustees to set rules for custody (eg, who controls private keys), transfers, and the use of service providers, reducing the risk of loss through scams, hacks or mis‑management and supporting proper valuation and record keeping for annual reporting.

Why auditors (and the SMSF) are under ATO scrutiny

The ATO has intensified monitoring of SMSF crypto holdings in SMSF’s because of growing participation, valuation complexity, and frequent instances of loss through scams, theft, or failed platforms. Approved SMSF auditors are now required to confirm that crypto investments are permitted by the trust deed, align with the fund’s investment strategy, are truly owned and controlled by the fund (wallets and private keys in the fund’s name), and are reported at a supportable market value with objective evidence rather than simple holding statements. The ATO also expects auditors to check separation of personal and fund holdings and to seek additional corroboration where valuation or custody is unclear.

Practical consequences

If deed powers, custody arrangements, valuation evidence or records are inadequate, auditors may report contraventions that trigger ATO compliance activity, potential rectification steps, and penalties for trustees. Robust trust deed wording, documented investment strategy, strong custody protocols and rigorous, evidence‑based valuation and record keeping reduce audit risk and demonstrate that the SMSF meets legal and fiduciary obligations when holding crypto. It is likely that SMSF’s that hold crypto assets will incur a higher audit fee as a result of the updated ATO expectations on SMSF Auditors.

For further information, feel free to contact the team at Appleby Accountants on 07 3876 6211.