INHERITANCE OF CRYPTOCURRENCIES

Abstract

The author examines the issue of cryptocurrency inheritance in the context of Ukrainian civil law. It has been established that cryptocurrencies constitute a new type of property with a specific technical and economic nature, in relation to which the current legislation of Ukraine does not provide special inheritance provisions. The results of the analysis demonstrate that cryptocurrencies: 1) represent information in the form of a sequence of data (numbers) containing an identifier that ensures their individualisation and, in essence, are a digital representation of value or a right with monetary value; 2) exist, circulate, and are stored exclusively in a digital environment; 3) access to cryptocurrency is ensured through possession of a private cryptographic key or access to an account of a service provider that stores the cryptocurrency and/or private cryptographic keys; 4) are based on cryptography and distributed ledger technology (DLT) or similar technology that uses pseudonymisation mechanisms, which do not allow for the unambiguous identification of the person who owns the cryptocurrency on the basis of public information, data contained in state registers, or information held by financial companies or other business entities registered in accordance with the law. The study of the inheritance institution shows that the technological nature of cryptocurrency, the peculiarities of its digital circulation, methods of storage and access, cast doubt on the effectiveness of applying traditional mechanisms of the inheritance law. In cases of cryptocurrency inheritance, the testator’s will to transfer their digital assets plays a key role, either through the performance of factual acts or through the execution of a unilateral (including a will) or bilateral legal transaction, in written form or as a smart contract. An important factor is also the method by which the testator’s private cryptographic keys are stored, as it directly affects the possibility of inheriting the cryptocurrency. It has been determined that the issue of inheriting cryptocurrency, the private cryptographic keys to which are stored in a decentralised manner without intermediaries, remains unresolved within the current legal framework. At the same time, Ukrainian civil law requires reform to introduce a broader legal toolkit and provide an appropriate level of protection for testators who intend to bequeath cryptocurrency or transfer it to heirs by other means.