How do you pass on your cryptocurrency assets – The Hustle website asked this question recently, using the example of an IT professional who’d suffered a near-death experience.
Ryan Klein had been clearing out a gutter at his home when he fell off a ladder. While he didn’t suffer any injuries, the thought struck him at the time that had he died, his wife had no access to his cryptocurrency and the money would have just disappeared.
The incident spurred him to action. He wrote down his private keys and account passwords and typed up detailed information on how to access his account (which totalled some $77,000-worth of coins) and found a safe place to store it.
Increase in cryptocurrency investors
This issue is one that is gaining prominence, thanks to the increasing numbers of investors in cryptocurrencies, and is leading to a growth in the digital asset inheritance industry. Had Mr Klein died on that day, if he had a Will his assets would have been distributed to his heirs. If he hadn’t got round to writing a Will, then an administrator would have distributed his asset according to intestacy laws.
But traditional investments, such as savings accounts held by a bank, are much easier to access than digital assets, as bitcoin and non-fungible tokens (NFT) have no central regulatory authority. Assets are maintained using digital wallets only accessible through passwords or private keys – a 256 long string of alphanumeric characters.
Without the private key, an heir cannot access the currency, which will remain in the blockchain. Estimates place 20 percent of all bitcoins as ‘lost’ where the wallets containing them have not been accessed in more than five years. This equates to 3.7 million bitcoins, or roughly $140 billion, which does not include other forms of cryptocurrencies.
No info on how to access accounts
It is thought that a significant percentage of lost bitcoins are because investors have died without informing their relatives on how to access their accounts. One high-profile case is that of Gerald Cotten, who was the CEO of a crypto exchange called Quadriga. When he died unexpectedly, he took with him the private keys to $250 million-worth of his clients’ cryptocurrency.
Another bitcoin miner, Matthew Moody, was killed in a plane crash in 2013, leaving behind thousands of dollars-worth of bitcoins and no way for his family to access them.
The Hustle conducted a survey of cryptocurrency investors and found that 40 percent of responders said they had no plan in place on how to pass on their assets to their beneficiaries. It is suggested that because cryptocurrency investors tend to be younger (average age 38), their demographic doesn’t give enough consideration to will and how inheritance works. Even among those surveyed, those who did have a will in place, only about one in five (22 percent) included their digital assets.
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