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While cryptocurrencies may not be considered financial products, authorised representatives and licensees are reminded related advice is not exempt from best interests duty.
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Caution advised on best interests duty with cryptocurrencies
30 January 2018
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6 minute read
Cryptocurrencies such as bitcoin and ethereum are becoming increasingly popular with accountants’ clients, and compliance consultants Assured Support is advising caution on best interests duty as the regulators increasingly circle.
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“If you’re an adviser who doesn’t want to recommend cryptocurrencies but your client comes and asks you to include them in the portfolio, then you have a best interests duty to address that,” Assured Support principal Sean Graham told sister publication ifa.
“There are some advisers saying they can recommend it because it’s not a financial product, well, it may be in some circumstances and if you read the tea leaves, it’s going to be more highly regulated in the future,” he added.
You can read more about the implications for licensed advisers here.
The ATO has cryptocurrency in its sights. It is currently engaging in external consultation in a bid to monitor tax compliance and ensure general awareness of the associated tax obligations.
Accounting executives like HLB Mann Judd’s tax consulting partner Peter Bembrick expect regulation and surveillance monitoring to increase significantly.
This is particularly concerning for those who don’t understand that cryptocurrencies with characteristics similar to bitcoin are an asset for capital gains tax (CGT) purposes. The ATO issued confirmation of this last year.
Accountants with SMSF clients who are looking to invest in cryptocurrencies should also be certain the fund is permitted to hold it. You can read more about compliance do's and don’ts with superannuation here.
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