As per the latest reports from Reuters, numerous Australians who invested their pension savings in cryptocurrency have faced huge losses amounting to millions of dollars.
The losses are attributed to the self-managed pension funds (SMSF) that are not regulated by Australian prudential regulators and allow individuals to independently make investment decisions within the limits of their pension savings.
These funds can be used to purchase real estate, private company shares, collectibles such as jewelry, wine, and more. SMSF or DIY funds account for 25% of all pension funds in Australia and are worth over $2.29 trillion.
Due to the pandemic, rising inflation, and declining returns on traditional financial instruments, thousands of DIY fund members have begun investing their retirement savings in alternative instruments, including cryptocurrencies, resulting in significant losses.
According to the Australian Revenue Authority (ATO), retirees have invested at least A$1.4 billion ($945 million) in crypto assets, and based on a 40% drop in the price of major cryptocurrencies, the value of SMSF’s cryptocurrency investment has fallen by approximately A$700 million.
To explore options for using the state stablecoin eAUD, the Reserve Bank of Australia (RBA) and the Corporate Digital Finance Research Center (DFCRC) recently announced the launch of a pilot project.