Cryptocurrency platforms Coinbase and OKX initiate novel SMSF services, aiming to penetrate Australia's massive AUD 2.8 trillion superannuation market.
In the land Down Under, the world of superannuation and cryptocurrency are intertwining, creating a new frontier for investment. Here's a snapshot of the latest developments.
The Australian superannuation system, currently valued at AUD 2.8 trillion, is projected to reach a staggering AUD 11.2 trillion by 2043, according to Deloitte's projections. This growth has not gone unnoticed, with many investors eagerly awaiting their turn on Coinbase's waitlist, with over 500 already signed up.
These investors are not just dipping their toes into the digital asset pool; many are planning to allocate up to AUD 100,000 into cryptocurrencies. This surge in interest has not been lost on Coinbase and OKX, who have both launched new services targeting Australia's self-managed superannuation funds (SMSFs).
The rise of SMSFs in the crypto space is significant. They make up a quarter of the system, and their crypto exposure has jumped to AUD 1.7 billion, up sevenfold since 2021. Both Coinbase and OKX are helping users set up SMSFs by connecting them to accountants and legal advisors.
However, this trend comes with its share of risks. Regulators have issued warnings about the dangers of cryptocurrency investments, citing the potential for volatility and scams. The Australian Securities and Investments Commission (ASIC) dismantled 3,015 crypto scam sites, representing 20% of total removals in over 2 years. ASIC also established a task force to investigate suspicious crypto activity.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has also taken action, ordering Binance's local unit to appoint an external auditor due to compliance concerns with anti-money laundering laws.
Despite these risks, both Coinbase and OKX expect mainstream adoption to grow once regulatory clarity improves. At present, AMP is the only major super fund with disclosed crypto exposure.
The COVID-19 pandemic tested the resilience of the superannuation system, with Australians withdrawing AUD 38 billion early without destabilizing the market. This resilience, coupled with the potential for higher returns, has led superannuation funds to explore global markets, including U.S. toll roads and Canadian ports.
SMSFs are typically suited to individuals with higher balances due to ongoing administrative costs. However, with the growing interest in cryptocurrencies, we can expect to see more Australians venturing into this exciting new investment landscape.
On the other hand, the Australian government is also taking steps to regulate the cryptocurrency sector. AUSTRAC is reviewing 427 inactive exchange licenses for potential deregistration, aiming to ensure that only legitimate players remain in the market.
In conclusion, the intersection of superannuation and cryptocurrency in Australia is an evolving story. While there are risks involved, the potential for higher returns and the growing interest from investors promise an exciting future for this burgeoning market. As always, it's crucial for investors to do their due diligence and seek professional advice before making any investment decisions.
