UAE: Who will own your cryptocurrency after you die?

In the last two years, the global user base for crytpocurrencies has increased by nearly 190 per cent in terms of traded volumes. A survey by Statista of consumers across 55 countries ranks consumers in the UAE 19th most likely to be an owner of cryptocurrencies, such as Bitcoin, in 2020.

But unlike ‘fiat currency’ such as the dollar or the dirham, which can be easily passed on, exchanged, or used for transactions, we are yet to gin an understanding of what will happen to digital currency their owner dies. We know of instances where assets have been lost forever- in 2019, a crypto exchange lost $145 million after its CEO suddenly died and no one had access to the password of the digital wallet.

Safekeeping of passwords is important and equally important is letting your loved ones know about them. “It’s a question that has been bothering me for some time. I have investments worth $100,000 in various crytocurrencies. I have bought these through a broker and not directly from the exchange, which allows me to nominate a beneficiary. So, I am guessing if my wife wants to have access to it when I am gone, she should be able to. But I am not sure of the procedure. I am yet to safekeep my cryptocurrencies in a digital wallet; they are just lying in my account for now, which I know can be vulnerable to cyberattacks. I plan to explore more and make my cryptos more safe and secure and also let my better half know,” says Bawa K., who has been investing in digital currency since 2017.

How are cryptos bought?

Cryptocurrencies can be bought ‘peer to peer’ from people, directly from organisations ‘over the counter’ who offer their own tokens for sale, or from public exchanges such as Coinbase, Bittrex, Binance, Bithumb, Huobi, etc.

“These are the channels for most of the people to get and sell cryptocurrencies. And there are many other ways to get digital assets, for example, C2C(customer to customer) transferring, which are usually not used much,” says Ola Lind, Director, SoBitX.

How are they stored?

The cryptocurrencies are based on blockchain technology and stored in a so-called wallet. Each wallet corresponds to a pair of keys, a public key and a private key. The public key is used as an address to receive coins and the private key is used to identify the owner.

“Each owner should keep the private key safe. Anyone with this private key can access the assets in this wallet," says Lind.

“In terms of storage, cryptocurrencies are stored in digital wallets. An individual has a range of choices in that regard, which include holding their digital assets in wallets on exchange, in software wallets such as metamask, or in hardware wallets such as Trezor or Ledger. In all cases, the individual must make their own judgment in terms of security and accessibility,” says Blaise Carroz, Vice President, Global Acquisition, Idoneus.

UAE law on digital currencies and wills

“While legally, the answer is yes, dependents can seek to claim digital assets, similar to any other type of asset, if your passwords, passphrases, and key locations die with you that probably won’t happen. Without those things your crypto assets will be inaccessible,” says Carroz, when asked if families could inherit their loved ones’ cryptocurrencies after they died.