What Happens to Cryptocurrency When Someone Dies?

Cryptocurrency is increasingly common in estates, and it creates a challenge that no other asset does: if no one can access it, it is gone permanently. Unlike a bank account where the institution can verify identity and release funds, crypto held in a private wallet is protected only by the private key. There is no "forgot my password" option and no central authority to appeal to. Getting this right early matters.

Crypto is part of the estate -- and taxed accordingly

HMRC treats cryptocurrency as a capital asset, not as currency. Any crypto the deceased held at the date of death forms part of their estate and must be included in the estate valuation for inheritance tax purposes. The value used is the market price at the date of death, taken from a reputable exchange.

Because crypto prices can swing dramatically, the date-of-death valuation is important. Use the closing price on the date of death from a major exchange (Coinbase, Binance, Kraken) or from a recognised price aggregator such as CoinGecko or CoinMarketCap. Keep a record of how you arrived at the figure -- HMRC may ask.

If the estate later sells the crypto and the price has changed since the date of death, there may be a capital gains tax liability on the gain between the probate value and the sale price. This applies to the estate in the same way as it would for shares.

The access problem -- private keys and seed phrases

This is the critical issue with crypto. Cryptocurrency held in a private wallet (as opposed to on an exchange) is controlled entirely by the private key -- a long string of characters, or a 12 to 24 word "seed phrase" that generates it. Without this, the crypto cannot be accessed or transferred. Ever.

Your first task as executor is to find out how the deceased held their crypto. There are two main possibilities: on an exchange, or in a self-custody wallet.

If the deceased used a hardware wallet -- a physical device such as a Ledger or Trezor -- look for the device itself and, separately, look for the seed phrase written down somewhere (often on paper or a metal card, kept somewhere secure). The seed phrase is typically 12 or 24 words written in a specific order. Do not input the seed phrase into any website or app unless you are absolutely certain you know what you are doing -- seed phrase theft is a common scam.

Check the deceased's paperwork, safes, document folders, and any secure storage they used. Some people store seed phrases with solicitors, in safety deposit boxes, or in encrypted files on their computer. Look for any notes or instructions the deceased may have left, including in password managers.

Crypto held on exchanges

If the deceased held crypto on an exchange such as Coinbase, Binance, or Kraken, the process is more straightforward -- the exchange acts as custodian and has a death claim procedure. You will typically need to provide a death certificate and, once probate is granted, a certified copy of the Grant of Probate. The exchange will then freeze the account and work with you to transfer or liquidate the holdings.

Each exchange has its own bereavement process. Contact them directly and ask what documents they require. Allow several weeks -- this is not a fast process. Do not attempt to access the account using the deceased's login credentials, as this could be treated as unauthorised access.

If you do not know which exchanges the deceased used, check bank statements for transfers to or from crypto exchange names. Look through email inboxes for account confirmation emails or trading notifications. Check whether the deceased had any crypto tracking apps on their phone.

NFTs and other digital assets

NFTs (non-fungible tokens) are subject to the same principles as cryptocurrency: they are capital assets for IHT and CGT purposes, they are held on a blockchain, and they require a private key to access and transfer. The same access challenges apply.

Valuing NFTs for probate purposes is more difficult than valuing major cryptocurrencies, as many NFTs have thin or non-existent markets. Use the last sale price as a starting point, and document your approach carefully. For high-value NFTs, a specialist valuation may be needed.

Practical steps for executors

• Search thoroughly for seed phrases and private keys before assuming the crypto is inaccessible. Look in physical documents, safety deposit boxes, password managers, and any encrypted files.
• Identify exchange accounts by checking bank statements and email. Contact each exchange individually to start the bereavement process.
• Do not attempt to guess passwords or use brute-force tools on hardware wallets -- many devices permanently lock or wipe after a set number of failed attempts.
• Record the date-of-death value for all crypto holdings, even if you are not yet able to access them.
• Take security seriously. Once you have access to private keys or seed phrases, keep them secure. Anyone who has this information can take the crypto.
• Get specialist help if the amounts involved are significant. Crypto asset recovery specialists and solicitors with digital asset experience can assist where access is difficult.

See also our guides on digital assets after death, executor duties, and inheritance tax.