While many may agree that investing a large sum of their portfolio into cryptocurrencies is risky, such a move is now standard for retirees in Australia who are betting their retirement prospects on the future of the industry.
According to a local news agency, Micky.au, the Australian Tax Office has sent letters to warn some 18,000 Self Managed Super Funds (SMSFs) in the country against investing more than 90% of their assets in property or cryptocurrencies.
The warning letter follows a finding by the regulator that SMSFs (a term used to describe retirement funds where the individuals make decisions) were investing more than 90% of their portfolio in either crypto or properties.
To this end, the tax office warned that although operating SMSFs, individuals were still required to comply with legal regulations by adopting investment strategies that are void of risky investments.
Failure to abide by the said regulation will attract a fine of up to $AUD 4200 ($2800) for retirees, the warning letter reportedly stated.
Meanwhile, an ATO spokesperson told the news agency that they “have already seen two instances of SMSFs losing significant amounts of their retirement savings through investment in cryptocurrency.”
To prevent similar occurrences in the future, another ATO official Dana Fleming, revealed that their agency would also write to auditors for SMSFs to let them know of growing concerns with concentration risk.
Crypto Firms Target Retirees in Australia
Understandably, the decision of retirees to put more than 90% of their portfolio in cryptocurrencies is not coming without industry participants preaching the freedom that these individuals can get if they invest in the emerging asset class.
The report highlighted that popular Australian crypto exchanges such as CoinSpot and Independent Reserve “directly market their services to SMSFs,” while former Indian platform, Zebpay set up shop in the country because of the same possibilities.
Zebpay CEO Ajeet Khurana who once spoke about the tough crypto regulatory stance in India has hailed Australia as a right place for their business.
“Australia happens to be the only developed country where retirement money, superannuation money, can very easily be invested into cryptocurrencies,” Mr. Khurana reportedly said.