Crypto in Super? No way!

I'm sure there are some crypto fans and libertarians reading this.

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I knew I shouldn't have tweeted about crypto.

I mean, seriously, what did I expect?

There are believers. There are zealots. And then there are crypto investors.

And didn't they let me know.

There is no certainty like that possessed by a crypto fan.

Where 'fan' doesn't even start to describe it.

(It's at this point I need to apologise to our Member Services team for all of the angry emails they're about to get!)

But, truth be told, I knew what to expect, but I waded in, anyway.

And I don't regret it, even though the replies were, at least to some extent, exactly what I expected they'd be.

I don't regret it, because my tweet was in response to an ABC article covering the problems faced by a couple who'd invested 25% of their self-managed Super in cryptocurrencies through a platform that's now frozen their funds.

And while the article was ostensibly about the platform, my tweet was broader.

It is my view that cryptocurrencies should not be an allowable investment in Superannuation in general and SMSFs in particular.

Yes, them's fighting words.

And no, I don't resile from them for a second.

Many, perhaps most, respondents agreed with me.

Of those who didn't, there were roughly two, meaningfully overlapping, camps.

The first are the true believers. The ones who believe they're in possession of the unalienable truth when it comes to cryptocurrencies. Oh, and also perfect foresight.

They just know that crypto is the future.

And so, obviously, investing in it is a no-brainer.

No, I don't know where they get their crystal balls from, either, but man I want one.

To be that sure about anything is remarkable. They'd put the Pope to shame for faith.

But to be that sure, about a technology that's in its infancy?

And, even more than that, to assume they can flawlessly estimate its future value?

That's impressive!

I'm being sarcastic, just in case it's not clear.

The second group?

They're the libertarians.

"We already have too much regulation… if we do this, we'll end up with tyranny."

Now, I didn't realise that the prescription of suitable Superannuation assets was the only thing standing between us and tyranny, but there we go.

"First they came to tell me what I could invest in, inside an already regulatorily restricted retirement fund…"

Okay, you lot, settle down.

I'm sure there are some crypto fans and libertarians reading this.

And I can tell you that some of them aren't slow in telling me when I've offended them.

So let me say now – to try to lighten the load on Member Services as well as to be clear – I'm having some fun with you.

I'm using a little hyperbole and humour to make a point.

So let me tone it down a little and get back to the issues.

First, you don't have to be 'anti'-crypto to think it's not an appropriate asset for Superannuation.

It is simply too early in its life as an asset, with too unknowable a future value.

It is simply too speculative an asset to be something that I think belongs in a retirement portfolio.

(At least for the foreseeable future, and that can always change, in time.)

And the regulation thing?

It's pretty simple: Superannuation is already highly regulated. Its use is restricted, the contributions are legally mandated.

Not only that, but the use of Super, from a public policy perspective, is clear – it's to provide retirement savings and income, and to consequently lighten the burden on the public purse.

It should follow, then, that regulation that ensures Super meets those two requirements, is almost a no-brainer.

I'm not saying people should be restricted from investing in crypto outside Super.

And I'm not saying that those who worry about how much regulation we live with don't have a point.

But we can afford to – we have an obligation to – use a little nuance here.

Zero regulation isn't an option in our society. So we should regulate judiciously, and I think this is a worthy cause.

And yes, people are entitled to use their own money as they see fit. But Super isn't 'my money'. It's restricted money, held by trustees, for my future benefit. And that should involve a little conservatism and the avoidance of speculation that could risk my nest egg or an unnecessary imposition on the Federal Budget.

I don't expect everyone to like the idea. The true believers will hate it. The libertarians will hate it.

I can live with that.

Because I think it'll be better, overall, for the Superannuation system, and for those fund members who could be saved from future losses.

Oh, and it's not the only thing I'd change about Super.

But I reckon it'd be a good start.

Now, fire at will!

(But, seriously, be nice to our hard-working Member Services team. Rude or abusive emails get deleted, so don't waste your time.)

Fool on!

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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