The relatively nascent practice of holding an ICO means legislation is yet to catch up, meaning questions around what happens to a person’s rightful tokens when they die are numerous. But following a number of lawsuits, U.S. lawmakers will soon decide whether a token acquired from an ICO will be considered no different to a share bought through an IPO.
“My bet is that ICOs, when issued by a company, they’re going to be considered securities,” said Peter Henning, a professor at Wayne State University Law School and veteran SEC and Justice Department lawyer. “If they are securities, then just like stock or bonds you can put them in your will and pass them down.”
This may take some time to come about. European Central Bank President Mario Draghi said Tuesday that blockchain technology is “quite promising” but that “the value of Bitcoin oscillates wildly. Of all things, I would not call Bitcoin a currency for this reason.”
Bitcoin Security
Some firms are beginning to make provisions. CoinBase is a custodial service, which holds a customer’s private keys — the kind that if lost would otherwise render any Bitcoins permanently inaccessible — and as such is able to provide some level of security in the event of a person’s death. The company asks for documents such as a death certificate and will in order to transfer the assets.
It’s not a solution that some enthusiasts will be keen to use, as the idea of someone else being in custody of Bitcoins is antithetical to decentralized, user-controlled ethos that sparked an interest in the anonymous currency in the first place.
CoinBase declined to comment for this story.
The safekeeping of a private key remains the bottleneck regarding the inheritance of Bitcoins. The startup Ledger SAS, which in January raised 61 million euros ($75 million) from investors makes electronic Bitcoin wallets. These use USB dongles to store passwords for accessing and spending cryptocurrency. Of course, if your heirs can’t find the dongle or don’t recognize it for what it is, the problem remains.
Ian Purton, CEO of the StrongCoin digital wallet service, said it’s an issue that has arisen as the industry matures, “and people start to consider family and what would happen to their digital assets.”
“When we first started out it was all about how we can best secure Bitcoin from hackers,” he said. “Now, our focus is also on protecting users who may be unfamiliar with cryptography.”