“A lot of auditors haven't seen it before, so it's going to be a whole new world,” said Mr Itaoui.

One of the key issues with bitcoin, he explained, is with ownership because it’s difficult to confirm who the actual owner of the bitcoin is.

“Due to the way that bitcoin and the blockchain ledgers work, it can be difficult to maintain separation between the assets of the super fund and the assets of the individual, a lot of times it's linked to their personal credit card for example, so it just creates a lot of specific audit risk,” he said.

Access Super Audit principal Vivian Bai explained that in order to purchase bitcoin, investors must have a bitcoin wallet.

“A wallet is a software program [and there] are many providers of this software. Once the necessary software has been downloaded, you have, in essence, opened a bank account with a zero balance,” said Ms Bai.

One of the compliance challenges of investing in bitcoin in an SMSF is that the wallet does not have the SMSF title on it.

“A wallet does not have any title on it. While title and ownership are fundamental concepts for SMSF compliance, bitcoin is pseudonymous by design,” she said.

Individuals can also have multiple wallets, she said, and each time a transaction occurs, there is a new address to it, so it can “be messy to create an audit trail”.

Investments in an SMSF, she said, must be clearly identifiable as being owned by the SMSF and clearly separate from assets held by the trustees in their personal capacity. 

“It is critical that an individual’s wallet is separate from a wallet dedicated to the SMSF. Otherwise it is an immediate breach of the separation of assets,” she said.

Ms Bai also stressed that bitcoin cannot be used as an in-specie contribution and the SMSF can’t purchase bitcoin from its members as it is neither a listed security nor a commercial property.

“It must be purchased with cash in the fund from an unrelated party,” she said.

SMSF clients may also need to update their investment strategy.

“Bitcoin is no doubt highly volatile based on historical pricing. The decision to invest in bitcoin needs to be reflected on in the fund investment strategy,” she said.

“Another consideration is that bitcoin may not fall into any existing asset class in the investment strategy. Bitcoin is not cash, it doesn’t have a physical form, therefore is not classified as a collectable, and it is technically a right. It is recommended that cryptocurrency is added as a separate asset class.”

She also recommended checking the trust deed to ensure that it does not prevent the trustee investing in bitcoin.