How To Transfer Cryptocurrency by Inheritance

Gaining profit from cryptocurrency are becoming more interesting for more and more investors and traders. When people own a certain number of digital assets, they begin to raise a question about the possibility of inheriting those assets, like the stocks or bonds. For now, nothing is known about the cases in which the cryptocurrency was inherited, but we cannot deny that this may be necessary for someone.

Inheritance in the usual sense

To transfer property by inheritance, you need to obtain documentary proof of ownership. The necessary documents are issued by authorised state institutions. In the case of inheriting securities, you should send a notarised request to the register of shareholders or to the institutions where the securities were purchased, such as banks or brokerage firms. Once you have received confirmation, you can proceed with the inheritance registration procedure.

Features of cryptocurrency

If we consider digital currency as an asset, we should take into account several differences from traditional instruments:

• It is not possible to determine who owns the cryptocurrency (anonymity)
• There are no registries of crypto investors
• It is impossible to obtain documentary evidence of the cryptocurrency ownership.

To obtain cryptocurrency, all you need to do is get a crypto wallet. Only an owner of the coins, who knows their wallet address and has a private key to access it, can conduct transactions with these coins.

Investors are undoubtedly attracted by the anonymous nature of cryptocurrency. Many governments try to regulate cryptocurrency somehow in order to make it more transparent. Such attempts have not given any results yet, and therefore it is impossible to equate digital assets with traditional investment instruments.

Because the crypto industry regulation at the legislative level is quite difficult, inheritance in the usual sense remains impossible.

Solutions to the problem

When crypto investor wants to transfer his assets as inheritance must solve the issue of keeping anonymity until the point when the heirs can enter into their rights. In addition, it is clear that the transfer of wallet logins and passwords to third parties may damage the cryptocurrency security and anonymity.

The secure transmission of cryptocurrency by inheritance must meet special requirements:

• Only the cryptocurrency owner should have access to the wallet
• The owner can use the cryptocurrency as he wants
• The anonymous nature of cryptocurrency
• Passwords to crypto wallets, information about their owner and possible heirs should be secured and inaccessible to third parties.

There are two ways, how investors can solve the issues that arise during the cryptocurrency inheriting.

Storing information in encrypted form

The blockchain technology makes it possible to save information in an encrypted form. Encryption makes this data inaccessible for unauthorised persons. Thus you can save the access keys to crypto wallets.

The cryptocurrency owner loads his wallet data into a special blockchain app, where this data is stored in encrypted form. It is necessary to fulfil some conditions in order to access this information, for example, it would be required to provide the necessary documents.

Data encryption makes access to information by third parties incredibly difficult. However, no technology in the world can grant absolute protection against intruders.

Bank safe

It is convenient to store your cryptocurrency wallet address and password on some kind of data storage: paper, memory card, flash drive. The most convenient and secure option for storing recorded information is considered to be a safe. However, it must also be inaccessible to unauthorised persons. A safe deposit box or bank safe, to which only their owner has access, meets these requirements.

When formalising a testament, the testator may grant heirs the rights to use the bank cell, without disclosing what information is inside it. Thus, the anonymity of cryptocurrencies would be kept.

Cryptocurrencies are steadily entering our lives. They are not yet widely used, but only amongst investors and traders. Currently, this field is poorly regulated by the state, as there is no clear understanding of how to do so. Over time, the situation is likely to change and cryptocurrencies will acquire some kind of legal status. Perhaps cryptocurrencies will be inherited in the same way as other property: securities, money, and other assets.