The numbers show that cryptocurrency is a huge market. No matter how you feel about the prospects of this digital, decentralized, anonymous currency, there is no denying that crypto coins are a huge part of today’s economy. The global cryptocurrency market cap, as of August 1st, 2022, is $1.06 trillion. $112 billion is traded per day, and 65% of coin owners own Bitcoin. A $22 investment in Bitcoin in 2012 is worth $1 million today.
There are upsides and downsides to owning crypto. Advantages include protection from inflation, privacy, no attachment to banks, easy to exchange, and cost-effectiveness. More and more businesses are accepting cryptocurrency as payment. Though the market is volatile, it’s easy to see why many coin owners swear by this form of currency.
More than 300 million people own cryptocurrency, and that means that this digital currency is a big part of estate planning for some individuals. Your estate includes your assets, and crypto is an asset for millions. Because it is an asset, that means that it can be included in an estate plan.
Crypto & Estate Planning Today
The cryptocurrency market is evolving rapidly, and the law is still trying to catch up. Crypto does create challenges in estate planning. The virtual asset is anonymous, and it might not be easily identifiable for heirs. Additionally, Bitcoin transactions require a private key. Each wallet has a private key and public address, but, otherwise, there is little personal information attached to it. Access is not as easy as with other assets (a house or car, for example).
Does that make it impossible to include Bitcoin and other currencies in an estate plan? Not at all. There are even cryptocurrency trustee services, and these services are the subject of this article.
Cryptocurrency Trustee Services
Trusts can own cryptocurrency, and, in fact, it is sometimes recommended that a trust be the primary estate planning tool because trusts afford privacy that wills do not. Wills have to go through probate, a public process. Because cryptocurrency assets are accessible only through passwords, PINs, and other private information, it’s best to keep this sensitive data out of the public eye. In a cryptocurrency trust, the donor transfers legal title to the cryptocurrency to a trustee. At the donor’s request or signal, the trustee transfers the cryptocurrency to the beneficiary.
Here are some things to think about if you have a trust that owns crypto:
If any of this is confusing, don’t worry. It’s a new field, and the law is still evolving to catch up. Contact an attorney today about setting up a cryptocurrency trust.