“Within superannuation, there is a set of legislations under the SIS Act that puts restrictions on assets, who to buy them off, and how to hold them,” she said.

“Every decision in acquiring assets has to be made against that sole purpose test, and special assets are no different.

“They are upheld to the same criteria but pose some challenges as they are not on any listed market like shares.”

According to the latest quarterly statistics from the Australian Taxation Office, there has been a steady rise in the inclusion of special assets, especially cryptocurrencies, especially in the increase of SMSF in younger demographics of 35 to 45 years old.

In 2018–19, crypto made up only around 1.5 per cent of SMSF assets, and in the latest data, it has more than doubled to 3.9 per cent.

“What we have noticed is a decrease in the average establishment age of SMSF from 50–46 years to 35–46 years,” she said.

“With that comes balances that are generally a bit lower, and it is in these we are seeing rise in cryptocurrencies. There is a correlation between younger people involved in the SMSF sector, but they have different attitudes and appetites toward investing, and crypto falls into that.”

Ms Foster said there is now a lot of interest in how cryptocurrencies will play out in superannuation, adding that the nuances of the asset create hurdles that have to be cleared to ensure they are compliant and meet the retirement goals of a self-managed fund.

“What an adviser has to determine is whether cryptocurrency is right to be included in an SMSF,” she said.

“From an SMSF adviser point of view, we have [to] determine whether cryptocurrency is an ethical addition by looking at whether the fund members are investing in it for the intent of their retirement.

“If it is sitting outside of the sole purpose criteria, it may not and from an accounting perspective, because cryptocurrencies are not listed, they are more difficult to value.

“For any collectibles, you have to get them independently valued, and with crypto, you have to get even more information.

“The fundamental complexities of this from a process standpoint is whether the time and effort to get it valued [are] worth it. What is the return on investment?

“It is all well and good to get on the crypto train, but the rules really prohibit what we can do with it a lot of the time.”

Ms Foster added that crypto is considered a capital asset, just like a share would be in a company.

“People often think the word currency would mean it is a form of money or cash and not subject to CGT, but crypto is considered a capital asset, so buying and selling it throws a CGT event every time they are bought and sold,” she said.

“That is something that trustees need to be aware of.”