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Back to "Community & Associations Newsletter - April 2023"


Advantages and Disadvantages of Crypto-Assets for Charities

As technology continues to advance and charities explore new and modern ways to fundraise, with great caution, they may investigate how crypto assets could be used.

Crypto-assets describe a class of asset that includes crypto-currency, digital tokens, and coins. Crypto-assets do not exist as tangible forms of currency, but rather as digital tokens stored in a digital “wallet”.

What are the benefits?

  • Crypto-currency is de-centralised and is not controlled by the Government. Each token or coin is a specific piece of code which cannot be replicated or interfered with. This makes the transactions very secure.
  • The main benefit of crypto-assets is that they can facilitate a global selection of potential donors.

What are the risks?

Many charities do not have the resources to manage crypto-assets. This often means that they are forced to outsource the management of the assets to an external third-party.

The outsourcing of financial management of crypto-assets has the potential to contravene a charity’s obligation under Governance Standard 5: in particular, the duty to ensure that the financial affairs of the charity are managed responsibly.

What should charities do?

  • Consider implementing crypto-currency policies that clearly set out the processes for the charity and donors to follow.
  • Understand and implement systems for gathering information to comply with reporting requirements.

ACNC have recently issued this guidance charities and crypto-assets.

Grace Brophy, Lawyer

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