Trustees Reject Crypto Assets Citing Volatility and Custody Risks
UK taxpayers sold 13.8 billion pounds in crypto last year, yet trustees refuse to hold these assets due to volatility and custody concerns.
Trustees are refusing to hold cryptocurrency for wealthy clients. The main reasons are price volatility and custody risks. This hesitation blocks a new class of digital asset millionaires from using traditional estate planning tools. The gap between crypto wealth and conventional trust structures is widening.
UK taxpayers disposed of 13.8 billion pounds in crypto assets in the year ending April 2025. Nearly 250 individuals recorded capital gains over 1 million pounds. Most of these large disposals were made by men under 45. This data comes from HM Revenue and Customs figures cited by the Financial Times.
Trustees Cite Fiduciary Duties
Lawyers report a surge in requests for offshore trusts. Clients want to move crypto proceeds into conventional structures. However, few trustees are comfortable holding digital assets directly. Many clients sell tokens first to convert them into fiat currency. Trustees remain cautious even after this conversion.
Ronald Graham of Winston Taylor notes younger family members want crypto exposure. Trust companies hesitate to meet these demands. Trustees have a legal duty to protect assets for beneficiaries. They view digital assets as too risky for long-term holding. This conflict creates a barrier to wealth transfer.
Tax Scrutiny Intensifies
The tax authority is increasing its oversight of the sector. Around 81,000 warning letters were sent to investors. These letters targeted suspected underpayment of taxes. The move signals stricter enforcement in the crypto space. Investors face higher compliance costs and risks.
Specialist screening tools can now trace crypto transactions. They analyze trading histories and source of funds. Despite this technology, trustees still face fiduciary burdens. They must verify the legitimacy of assets. This adds a layer of complexity to estate planning.
Custody Problems Complicate Inheritance
Crypto ownership depends on access to private keys. Unlike bank accounts, assets can be lost if keys are inaccessible. Owners who die without a recovery method leave heirs with no access. This creates a unique risk for estate planning.
A crypto estate plan requires specific technical arrangements. It must cover wallet access and private key management. Legal documents alone are insufficient. Beneficiaries need instructions to recover assets. David Schwartz proposed a setup with duplicate hardware wallets. This highlights the operational challenges of digital inheritance. GN markets/crypto (en-US) reports on these structural shifts in wealth management.
