Cryptocurrency, commonly known as cryptoassets, is a form of digital currency managed independently from a central bank and underpinned by technology called Blockchain. It is estimated that there are over 1,600 different cryptocurrencies around the world with Bitcoin currently identified as the most popular having over 7.1 million active users.
Studies suggest that nearly 90% of cryptocurrency owners worry about what will happen to their cryptoassets on their death. However, many owners fail to put a plan in place meaning in many cases this can be financially devastating.
If an individual dies and the private keys are lost to a cryptocurrency wallet, the cryptoassets are essentially lost forever. HMRC guidance suggests if an individual misplaces their private key, they will not be able to access the cryptoassets meaning that although the cryptoasset is still available, it is no longer accessible. This is due to the highly secure nature of Blockchain meaning the entire process is decentralised so there is no way to restore a private key.
Millions of pounds worth of cryptocurrency has been lost forever because owners have died without leaving a contingency plan. Crypto insurance firms estimate that around 4 million Bitcoin, which amounted to 68 billion dollars in November 2020, is out of circulation after access was lost, with a large portion likely caused by death.
Cryptoassets are similar to property in that they can be gifted and inherited. However, although your loved ones may be able to prove they are the beneficiaries of your cryptocurrency portfolio if they can provide proof of death and your Will, this is extremely challenging as there is no central organisation in charge of the ‘wallet’.
It is therefore extremely important that steps are taken to ensure that your wishes are carried out. Specific instructions should be left in a secure manner, detailing how to access the private key in the wallet, all usernames for online accounts and any details on the public and private key themselves. This will ensure a devastating financial loss is avoided in addition to your loved one’s grief.
Millions of pounds worth of cryptocurrency has been lost forever because owners have died without leaving a contingency plan. According to a 2020 study by the Cremation Institute, nearly 90 per cent of all cryptocurrency owners are worried about what will happen to their crypto when they die, but rarely do they make provisions for ensuring it is not lost forever.
https://www.thegazette.co.uk/all-notices/content/103925
