FYI, below direct from ATO answered SMSF example scenario:It's...

FYI, below direct from ATO answered SMSF example scenario:

It's important to note that the ATO does not have the legislative power to force SMSFs to sell or move assets – SMSF trustees can invest how they wish. The requirement is that trustees give consideration to diversification and clearly document the reasons behind their investment decisions with regard to the composition of the entity’s investments as a whole, including the extent to which they are adequately diversified.

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You are required to draw up an investment strategy for the SMSF, so that is where you need to consider diversity and all the other issues that need to be addressed.

You can refer to the asset allocation of the industry fund as a way to justify the lack of diversity in the SMSF, but you will also need to justify crypto in terms of the risk. You have a duty as a trustee to manage risk.