The Rise of Bitcoin Losses After Death, and the Cryptocurrency Privacy Aspect
The Rise Of Crypto Losses After Death
The investment in cryptocurrencies calls for secrecy, one that eventually becomes the peril of many crypto investors who die leaving behind a fortune their family may never be able to access.
There have been examples across the world where investors do not leave behind a clue as to their crypto wealth.
In one of the most widely publicized recent examples, U.S. investor Matthew Mellon died earlier this year, leaving few clues to a crypto fortune reportedly valued at more than $500 million.
Elsewhere in South Africa, for instance, thousands of people have invested in cryptocurrencies. However, once they pass away, many of those individuals will die with their holdings.
Eran Brill, an investment management director at Stonehage Fleming in South Africa told a news site that “as a young industry, with little regulation, it is crucial for investors to become more responsible in their attitude towards cryptocurrency investing.
“Investors need a storage execution strategy for account information, as well as advice on the implications regarding the deceased estate, including access to accounts, distribution to beneficiaries, and tax implications.”
When bitcoin investors die without leaving their private keys, families must deal with a kind of “double funeral,” as they mourn the loss of their loved ones while coming to terms with the loss of an irretrievable fortune that might have been theirs.
This points to the fact that while bitcoin’s safe remove from regulators and impenetrable privacy from regulation may be its attraction — it can also become its fatal weakness.
According to Chainalysis, about 25 percent of all bitcoins now in circulation (valued at roughly $23.5 billion) have already been lost forever. Death likely accounts for a good portion of these losses. But the recent example of Mellon, in particular, may encourage investors to start thinking beyond their own lives.
Mellon died in April at the age of 54. He passed away with up to $500 million in ripple stashed away in cold storage under fake names in banks across the U.S.
But the secretive millionaire took his fortune with him because he failed to name heirs to his wealth and did not provide information on how to access his crypto wallets.
Posthumous losses of cryptocurrency will likely become more of a problem in the years to come, as investors will remain inclined to value secrecy to safeguard their wallets.