In 2018, 30-year-old Canadian founder of the cryptocurrency exchange “Quadriga” died suddenly. He alone knew the passwords required to allow the 300,000 users of the platform access to their currency. His death meant that every user of this platform had forever lost their investments, resulting in total losses of around $150,000,000.00.
As digital assets continue to rise in popularity, the amount of people holding digital assets and dying without either telling others of the assets, or not providing enough information in order to access the assets, is dramatically on the rise.
There are two ways cryptocurrency can be held. One is in a “private wallet”, and the other is in an “exchange account”. The method in which you hold your cryptocurrency can have real consequences for access by your executor.
Exchange accounts are most common in the case of low value traders and involve a third party which holds the cryptocurrency for the trader. These accounts are much more accessible for executors that do not have enough information to access the account, as the executor can contact the exchange account manager. Exchanges generally have practices in place for dealing with deceased estates.
Private wallet accounts, however, present a very difficult challenge for executors. Often, they are protected by complicated security measures, and because they are run solely by the wallet holder there is no third party to contact to gain access to the account. In effect, if your executor cannot find the information needed to access the account in your private records, the assets will likely be lost forever.
If you hold digital assets, it is essential that you take steps to ensure they are not lost if you die. This might include having appropriate clauses in your will.