Introduction
In an era where digital assets are increasingly prevalent, the inheritance of virtual currencies has gradually become an unavoidable legal and practical issue. When life comes to an end, what becomes of wealth stored on the blockchain? Are such assets protected by law, and what challenges arise in the course of their inheritance?
From a lawyer’s perspective, this article examines the legal characterization and practical challenges of inheriting virtual currencies, drawing on statutory provisions and representative cases.
Starting with the Landmark Precedent of the Madras High Court
In October 2025, the Madras High Court in India issued a landmark ruling holding thatcrypto assets satisfy the legal definition of “property”, and can be owned, transferred, and held in trust. The case arose from the freezing of 3,532 XRP tokens belonging to an investor on the WazirX exchange,and the court ultimately confirmed that the assets should be protected as property.This ruling not only provided judicial reassurance to India’s digital asset market, but also marked the gradual formation of global legal systems’ understanding of “virtual property.” In other words—virtual currencies have evolved from “digital game tokens” into “property.”
In recent years, the legal view that “cryptocurrencies constitute intangible property” has increasingly emerged, outlining the evolution of global legal systems’ understanding of the nature of digital assets, and providing a legal foundation for addressing issues of virtual currency inheritance.
Legal Nature of Virtual Currencies
The "property nature" of virtual currencies is being widely accepted by the global judicial community. Although the technical foundation of virtual currencies is data, theirpossessability, transferability, and economic valueclearly endow them with the core characteristics of property. Precisely because of this attribute, civil and criminal cases involving the ownership, tortious infringement, and fraud related to virtual currencies have frequently emerged worldwide in recent years, compelling legal practice to respond to this new form of property.
This convergence in judicial recognition paves the way for the inheritance of virtual currencies.When virtual currencies are recognized as property, they naturally fall within the scope of inheritance law.
Under the Chinese legal framework, Article 127 of the Civil Code innovatively provides:"Where laws have provisions on the protection of data and online virtual property, such provisions shall prevail."This provides a legal basis for the protection of virtual property.
Furthermore, Article 1122 of the Civil Code adopts a general legislative model for the definition of estate, defining an estate as "the personal lawful property left by a natural person upon death." This breaks the limitations of the enumerative legislative approach adopted by the former Succession Law, significantly expanding the scope of estates,thereby making it possible to include new types of property, such as online virtual property and digital currencies, as objects of inheritance.
At the regulatory level, documents such as the Notice on Preventing Bitcoin Risks and the Announcement on Preventing Risks Associated with Trading and Speculation in Virtual Currencies, while emphasizing risk prevention and control, also characterize virtual currencies such as Bitcoin as "specific virtual commodities." From a jurisprudential perspective, this characterization as "virtual commodities",In practice, their property nature has been acknowledged, providing a logical starting point for the inclusion of virtual currencies within the succession regime.
Practical Dilemmas in the Succession of Virtual Currencies
In theory, succession poses no issue; in practice, the challenges lie entirely in the details.
Mainstream crypto assets such as Bitcoin and Ethereum have substantial market capitalizations, resulting in many investment portfolios containing significant virtual wealth, which inevitably involves wealth transmission. Although judicial practices in various jurisdictions and general legal provisions have created space for the succession of virtual currencies, multiple dilemmas persist in practical operations.
1. Proof Challenges: How to Prove Invisible Assets?
Due to the decentralized and anonymous nature of blockchain technology, there are certain obstacles to proving ownership of virtual currency assets.Bank accounts have transaction records, and real estate has registration records, whereas the "evidence of ownership" for virtual currencies is embedded at the technical layer: private keys, mnemonic phrases, exchange accounts, and the like. These do not constitute traditional legal instruments.Heirs are required to provide not traditional certificates of title, but rather electronic data evidence related to the decedent’s virtual currencies. However, is such evidence sufficient to prove property ownership, intent regarding disposition, and eligibility for succession? Furthermore, most users fail to expressly preserve relevant credentials during their lifetime, causing much digital wealth to ultimately vanish within the vast data of the blockchain.
2. Succession Mechanisms: Can They Operate Smoothly?
The storage location of virtual currencies directly determines the difficulty and process of succession.
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On exchanges (such as Binance or Coinbase): Heirs may contact customer support and submit documents including the decedent’s death certificate, probated will, and identity verification materials, with assets transferred following internal platform review. However, laws vary by jurisdiction, and this process is time-consuming, carrying risks of changes in platform policies or insolvency. It remains unclear whether platforms can effect such transfers. Alternatively, heirs may need to know the login password and complete various verification steps to transfer the assets.
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For assets held in wallets, heirs must know the private key or mnemonic phrase; once this alphanumeric string is lost, it is akin to losing the only key to a safe.
3. Technical Barriers: The Dilemma of Private Keys and Security
The core challenge in inheriting virtual currencies lies in their technical nature.
In the crypto world,the private key equals ownership. Without the private key, any will is merely futile.If the decedent fails to properly disclose the private key or mnemonic phrase to the heirs, the corresponding assets are likely to be permanently lost. In 2018, Gerald Cotten, the founder of the Canadian exchange QuadrigaCX, passed away suddenly. As he was the sole holder of the cold wallet’s private keys, user funds totaling USD 147 million in crypto assets became irrecoverable. This case exposed the vulnerability of centralized storage mechanisms in inheritance matters. Furthermore, a report by Chainalysis pointed out that approximately 20% of Bitcoin remains permanently dormant due to lost private keys or the death of holders. This constitutes a highly costly form of “digital silence.”
Even if heirs possess the private keys, they must have certain technical operational capabilities. A single input error or an inadvertent click on a phishing link could cause the assets to vanish forever. The inheritance of digital assets has never been so dependent on “technical barriers.”
4. Valuation and Division: Legal Challenges Posed by Volatility
Sharp fluctuations in virtual currency prices: today's inheritance may halve or double in value by tomorrow. From a legal perspective, which point in time should serve as the valuation benchmark? How can equitable distribution be achieved? For wallets containing multiple tokens, division is virtually a "technical engineering" task. In most cases,liquidating first and then dividingis a more realistic approach, but this raises new questions: how to complete the liquidation in compliance with applicable laws?
Legal Tip: Asset Planning for Holders of Virtual Currencies
As lawyers, our advice is—do not leave digital assets to fate.
Holders of virtual currencies fully recognize the proprietary nature of virtual currencies and the trend toward their legal recognition and protection. In view of the particularities and complexities involved in the inheritance of virtual currencies,holders should:
1. Clarify the existence and quantity of virtual currency assets
The concealment inherent in virtual assets constitutes the primary obstacle to inheritance. If heirs are unaware of the existence of such assets, any inheritance planning is futile. It is advisable for holders of virtual currencies to record the following key information: types of assets (such as Bitcoin, Ethereum, and other tokens); clear identification of asset storage locations (such as centralized exchanges, cold wallets, and self-custodied hot wallets); public key addresses; and, where appropriate, private keys or seed phrases (though it is recommended to print or handwrite these on paper rather than store them on computers or other electronic devices). For exchange accounts, record the platform name, registered email address or mobile phone number, password, and other relevant credentials.
2. Securely and cryptographically safeguard private keys, seed phrases, and other critical data
Hardware wallets currently represent a relatively secure storage solution. They isolate private keys in an offline environment, significantly reducing the risk of cyberattacks. Private keys and seed phrases serve as the absolute proof of control over assets; their security is directly equivalent to the security of the assets themselves. Loss results in permanent loss of the assets, while disclosure leads to theft. Backups (such as USB drives or paper records of private keys) may be stored in multiple secure locations, such as safe deposit boxes.
3. Establish digital asset inheritance plans or trust arrangements
By transferring wallet ownership to a trust, virtual currencies can be incorporated into a trust structure, with designated trustees professionally managing the virtual currencies. A wallet may be configured to require two out of three private keys for authorization. The three keys would be held respectively by the decedent, the heir, and a lawyer or other trustee. Upon commencement of the inheritance process, the remaining two parties can cooperate to verify and transfer the assets, thereby combining decentralized security with legal oversight.
4. Monitor trading platform policies and regulatory developments
If assets are held on third-party trading platforms, the stability and compliance of such platforms are particularly important, as policy changes or regulatory actions may freeze or even revoke access rights. It is necessary to understand and monitor platform operating rules and applicable regulatory policies to address potential risks and changes.
In the crypto world, the true risk often lies not in theft, but in being forgotten. Only through advance planning can digital wealth preserve its value and become a stable inherited estate.
