The legal position of ‘cryptoassets’ has not been certain in the past. However, a recent legal statement by the Chancellor of the England and Wales High Court has confirmed that they are to be treated like all other property.
‘Cryptoassets’ are best defined as assets which exist in electronic form and are held on distributed ledgers. Bitcoins is the best-known example of this. This has important implications for the estates of deceased people who hold such assets, as well as having importance in a number of other circumstances, such as bankruptcy. The argument that such assets lacked the usual quality of property, in that they only have value by consensus and are intangible, was rejected.
The decision followed a six-month investigation of the issue by the UK Jurisdiction Task Force, chaired by Lord Justice Geoffrey Vos.
The decision means that bitcoin and similar assets will need to be valued at the date of death of the owner and included in the estate subject to Inheritance Tax. They will also pass in the same way as other assets under the will of the deceased. The legal owner of the cryptoasset is the person who has the key to trade them.
The statement does, however, provide that such assets cannot be used as security for certain types of transaction.