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Cryptocurrency

Also known as: Crypto, Digital Currency

Definition

Cryptocurrency is digital currency secured by cryptography and recorded on a blockchain, constituting personal property under UK law that can be included in your will and passed to beneficiaries.

Understanding cryptocurrency's legal status is essential for estate planning. The Law Society reports that 93% of will-makers haven't included cryptocurrency provisions despite 6.2% of UK adults (over 4.2 million people) owning digital currency.

What Does Cryptocurrency Mean?

Cryptocurrency is digital currency existing only online, secured by cryptography and recorded on a blockchain. Unlike traditional currencies controlled by central banks, cryptocurrency operates through decentralised networks. Common examples include Bitcoin and Ethereum. The Property (Digital Assets etc) Bill 2024, which received its second reading in July 2025, creates a third category of property under English and Welsh law to include digital assets like cryptocurrency, confirming the UK Jurisdiction Taskforce's 2019 position: cryptocurrency is recognised as personal property.

Cryptocurrency is stored in digital wallets accessed via private keys—cryptographic passwords that prove ownership. These private keys (or seed phrases, 12-24 word sequences that restore wallet access) are the only way to control your cryptocurrency. Sarah, 34, holds £12,000 in Bitcoin on a hardware wallet with her seed phrase in a fireproof safe. If she loses that phrase, her £12,000 is permanently inaccessible—there's no password reset. This makes estate planning critical, as executors cannot access wallets without credentials, even with a grant of probate.

HMRC treats cryptocurrency as a chargeable asset subject to inheritance tax. Holdings are valued at death and included in your estate's total. The £325,000 nil-rate band applies, with 40% tax on amounts above. The critical distinction is exchange custody (Coinbase, Binance) versus self-custody wallets. Exchange-held cryptocurrency is easier for executors to access with a death certificate and grant of probate. Self-custody wallets require private keys—without them, cryptocurrency is permanently lost. David, 28, invested £850 across three wallets but never documented them. When he died, his partner Luke recovered one exchange account (£300) but couldn't access the mobile wallet (£400) or desktop wallet phrase (£150), losing £550 permanently.

Common Questions

"Do I need to include cryptocurrency in my will?" Yes, cryptocurrency is property under UK law and forms part of your estate for inheritance tax. List all cryptocurrency holdings in your will and appoint an executor with authority to access digital assets. Never include private keys in the will itself as it becomes public during probate.

"How can my executor access my cryptocurrency after I die?" Your executor needs your private keys or seed phrases to access wallets. Create a separate confidential letter explaining where to find credentials, which exchanges you use, and step-by-step access instructions. Store this securely and tell your executor where to find it.

"Is cryptocurrency subject to inheritance tax in the UK?" Yes, HMRC treats cryptocurrency as a chargeable asset. Holdings are valued at death and included in your estate's total. If your estate exceeds £325,000 (the nil-rate band), inheritance tax at 40% applies to amounts above.

Common Misconceptions

Myth: Cryptocurrency is completely anonymous, so it doesn't need to be declared in my estate.

Reality: While cryptocurrency transactions use pseudonyms (wallet addresses) rather than real names, they are fully traceable on the blockchain. The Property (Digital Assets etc) Bill 2024 legally recognises cryptocurrency as property under UK law, and HMRC treats it as a chargeable asset that must be declared for inheritance tax. Failing to declare is tax evasion, and holdings can be discovered.

Myth: If I lose my private keys, my cryptocurrency provider can help me recover access.

Reality: For self-custody wallets, lost keys mean permanently lost cryptocurrency—there is no password reset. Centralised exchanges like Coinbase can help recover access if you've set up recovery options, but cryptocurrency in personal wallets cannot be recovered without the original private keys or seed phrase. Over 20% of Bitcoin is estimated lost forever due to lost private keys.

  • Digital Assets: Cryptocurrency is one type of digital asset alongside NFTs and cloud-stored files requiring estate planning.
  • Bitcoin: The first and most well-known cryptocurrency, created in 2009 as decentralised digital currency.
  • Ethereum: The second-largest cryptocurrency by market value, with smart contract functionality beyond Bitcoin.
  • Blockchain: The distributed ledger technology recording and securing cryptocurrency transactions.
  • Cryptocurrency Wallet: Software or hardware storing private keys controlling cryptocurrency, essential for executor access.
  • Private Key: The cryptographic password proving cryptocurrency ownership and enabling spending.
  • Hardware Wallet: Physical device storing private keys offline for enhanced security.
  • NFT: Unique digital items recorded on blockchain, requiring similar estate planning approaches to cryptocurrency.

Need Help with Your Will?

If you own cryptocurrency, including it properly in your will is essential to prevent permanent loss of these digital assets. Without documented access instructions, your executor cannot recover your cryptocurrency holdings regardless of their legal authority.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete, legally binding will plus three expert guides. Preview your will free before paying anything—no credit card required.

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.