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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
