As Bitcoin’s price rises, wealthy investors are starting to take a look

Several companies offer secure key storage or custody services as they are known for other financial assets. According to Revill, Two Ocean’s system combines people and algorithms to securely move cryptocurrencies from “cold” storage when the device with the keys is not connected to the internet to the “hot” storage where the bitcoin is connected to the internet so a transaction can take place.

Tom Jessop, the head of Fidelity Digital Assets, part of the financial services company Fidelity Investments that acts as the cryptocurrency custodian and operates funds that invest in the currencies, said the company’s strategy is to manage the dealings behind the currencies that way that they were no other than stocks or bonds.

“It’s roughly the same as any other asset you own,” said Jessop. “There is an account number that allows it to be measured and monitored, and your financial advisor knows about it and knows it in relation to an estate plan.”

Part of most estate plans is a series of trusts that hold various assets for future generations. The trustees tasked with implementing the guidelines in trust agreements have some major currency concerns. One of these concerns the liability associated with a breach or loss of a key, said Frazer Rice, regional director for Northeast at the Pendleton Square Trust. Another, however, is the prudent management of the asset itself due to its volatility in the context of other assets of the trust.

“We’re used to dealing with stocks and bonds and illiquid assets,” he said. “Now crypto is intersecting with centuries-old estate planning and legal tools. People really need to think twice and ask what it means for someone to be responsible for their crypto when they’re dead. “

In trust planning, investors who keep their keys on a USB stick and keep them in a safe could find themselves in the same tax situation as people who trust real estate. The jurisdiction for disputes rests with the location of the property, not where the trust was established.

For years, New York State has been tracking where valuable art hangs. Someone may officially be based in Florida, where there is no state estate tax, but if a $ 100 million painting hangs in that person’s apartment on Park Avenue, New York will tax it. The same could be true of the place where a USB stick is stored, Rice said.

Comments are closed.