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Cryptocurrency has become a controversial topic for the finance industry. The world’s interest has especially peaked in 2017 when Bitcoin’s value reached a record high of $19 million before crashing towards late January of this year.

Clients keep asking financial advisors about cryptocurrencies, but actually, cryptocurrency is not a financial services product. And many financial planners are still wary of the industry. In fact, a survey found that 29% of financial planners are interested and will keep an eye on it, but will not invest yet, while 24% view cryptocurrency simply as gambling, where you invest money you can stand to lose. Around 18% believe it is a “fad best avoided”.

How Financial Planners Approach Cryptocurrency

In an interview with Dr. Mark Sinclair of Mentor Education, the issue of cryptocurrency entering the financial landscape is discussed. According to Sinclair, while it is not something that is on the approved product list which financial planners can give advice on, the fact is that it is now included in some investment strategies.

“As we do balance sheet, expenditure, income and the like, it’s a component in some investment portfolios…you can’t ignore it as a financial planner as you construct a financial plan for a client,” he shares. But a disclaimer, he says, needs to be clearly stated that planners cannot give advice in relation to cryptocurrency.

Sinclair further shares that while financial experts cannot cover cryptocurrency directly, they do give taxation planning advice, which could touch on cryptocurrency. If for instance, a client has a self-managed super fund and uses that fund for trading in cryptocurrency, there is a tax implication for that investment. Here, he says, is where the advice of a financial planner comes useful.

So how should financial planners approach cryptocurrency? For Sinclair, even though planners are not licensed to give any professional advice on cryptocurrency, it’s actually no different than other investments that a client might go for. “If you’re a financial planner, you’d want to know what your client is investing on,” he explains. Advice on capital sufficiency, risks and other aspects will apply to cryptocurrency, much like property investments and other similar cases.

Cryptocurrency and Self-Managed Super Funds

For people who have SMSFs and are considering buying or treating cryptocurrency as a derivative, there are procedures set for such trading. One important step is to set up a bare trust for the SMSF – a trust document specifying that you have permission to trade and act on behalf of the super fund.

While cryptocurrency is an exciting prospect, it is still a volatile field where some people make capital gains while some sustain huge losses. As far as policies go, Sinclair emphasizes that taxation policies in Australia have simplified rulings. “At the end of the day, you can’t assume that the ATO won’t bring you to account in due course for those capital gains and capital losses,” he says.


Financial planners are looked upon to provide sound investment advice. With cryptocurrency, it is still a widely contested issue if the industry should be considered a viable prospect or otherwise. What financial planners can do in the meantime, is to ensure that clients are well informed about taxation guidelines, as well as possible implications of cryptocurrency on their SMSFs.


Looking to get advice from a financial planner? Dollars With Sense offers free consultations to all our members. Book yours now https://dollarswithsense.com.au/Book-Your-free-consultation