“Cryptocurrency is generally allowable subject to adequate consideration in the fund’s investment strategy and allowability in the fund’s trust deed but be careful of variations,” Mr Busoli noted.

Non-fungible assets (NFTs), on the other hand, are likely to cause compliance issues for the fund, he cautioned.

“Non-fungible assets are arguably works of art and therefore fall into the category of collectables. The draconian rules surrounding collectables significantly discouraged SMSFs from investing in physical works of art,” he said.

“When these rules are applied to digital assets it is clear that it is impossible to comply with them so NFTs simply can’t be held in an SMSF.”

While cryptocurrency is not impacted by the rules for collectable assets, Mr Busoli said the lack of audited processes and general lack of auditable evidence surrounding crypto transactions and ownership inevitably leads to SMSF audit qualifications. 

“Consideration should also be given to the cost of processing crypto data as platforms and downloadable data systems are in their infancy,” he added.

In an article last month, Townsends solicitor Elizabeth Wang said it might be difficult for an SMSF to satisfy the sole purpose test where they hold NFTs.

“The ATO states that a cryptocurrency is more likely to have been acquired as a personal use asset if the cryptocurrency is acquired and used within a short period of time in comparison to a cryptocurrency being acquired and held for time before any such transaction is made,” Ms Wang said.

An SMSF may be able to satisfy this requirement, she said, if the trustee is able to show that the NFT will not be used as a personal-use asset by the trustee or the members of the SMSF and instead will be kept or mainly used as an investment.