Coinbase exchange is planning to target Australia’s $600 billion self-managed pension sector by developing tailored services to meet the demand for crypto products. The Asia-Pacific Managing Director, John O’Loghlen, confirmed that the exchange is working on a specialized offering to cater to clients who may only make a single allocation and want to trade and stay with Coinbase. Self-managed super funds represent a significant portion of Australia’s pension system, with a quarter of the $2.5 trillion total being allocated to these portfolios. However, the amount invested in crypto assets has decreased from its peak in 2021, possibly due to concerns about volatility and past scandals in the crypto sector.
Recent changes in Australia, such as discussions around launching crypto exchange-traded funds (ETFs) and the increase in Bitcoin prices, have led to a rise in crypto holdings within self-managed retirement funds. Despite this growth, there are warnings from wealth management experts about the risks associated with investing a significant portion of a portfolio in high-risk assets like cryptocurrencies. Investments in cryptos within these self-managed pension funds are more common among investors in their 40s with low account balances, according to Michael Houlihan, the head of a private wealth management firm. Previous cases have shown that risky bets on crypto assets can lead to substantial losses for investors in the DIY pension sector.
In 2023, thousands of Australians using self-managed pension funds to speculate on cryptocurrencies faced significant losses amounting to hundreds of millions of dollars. These risky bets put their retirement savings at risk as the investments were outside the oversight of the prudential regulator that usually oversees professionally managed funds. While Australia’s DIY pension sector is relatively unregulated, other countries have restrictions in place to prevent direct investments in Bitcoin and other cryptocurrencies. For example, in the UK, self-managed pension funds are not allowed to invest directly in crypto assets.
Coinbase’s move to target Australia’s self-managed pension sector comes at a time when the interest in cryptocurrencies within these funds is on the rise. The exchange aims to capitalize on the growing demand for crypto products by offering specialized services to meet the unique needs of these investors. With the potential for further growth in crypto investments within self-managed pensions, Coinbase’s tailored services could provide a convenient and secure platform for clients to trade and manage their digital assets. However, concerns about the risks associated with investing in high-volatility assets like cryptocurrencies remain, and investors are advised to exercise caution when allocating funds to these assets within their portfolios.
