Can Cryptocurrency be Inherited?

Mississauga Board of Trade
Mississauga Board of Trade


February 15, 2021


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Author: Craig Ross, Partner, Pallett Valo LLP

Is cryptocurrency legal in Canada?
The Government of Canada has stated that cryptocurrencies are not a form of legal tender in Canada, and a few Canadian banks have banned the use of cryptocurrencies to complete banking transactions.

Cryptocurrency offerings otherwise known as initial coin offerings (ICOs) or initial token offerings (ITOs) may trigger securities law. The Canadian Securities Administrators (CSA) recently announced that any business planning to raise capital through offerings would have to consider whether it involves a distribution of a security. Income earned in cryptocurrency, or capital gains or losses incurred through trading cryptocurrencies, are subject to the Income Tax Act. Goods and services bartered using cryptocurrency is subject to any applicable sales taxes.

Can I inherit cryptocurrency?
The short answer to this is, yes.  Whether by legislative vesting provisions such as s.2(1) of the Estates Administration Act (Ontario) or by the terms of a Will, cryptocurrency will be captured as part of all of the real and personal property of a deceased which vests in the executor.

The more difficult question is how to access the deceased’s cryptocurrency.  Since cryptocurrency can only be transferred through the owner’s “private key”, the estate would need to be in possession of the private key in order to access the cryptocurrency assets.  Without the private key, the cryptocurrency is likely to be inaccessible, and would be considered inactive.

Cryptocurrency owners should ensure that the existence of a cryptocurrency wallet is declared as an inheritable asset in their will.  To protect their families, cryptocurrency owners can use third-party services to manage their private keys in the event of death, entrust the private key to a family member or advisor, or keep a physical list or flash drive of private keys in a safety deposit box with instructions on how to access the cryptocurrency.

Dead Man’s Switch
Another more unconventional method is referred to as the Dead Man’s switch. This involves a third-party computer automated program that emails you at regular, specified times, and awaits your reply. If the program does not receive a reply, it checks death certificate records of your passing. Thereafter, it transfers the contents of your cryptocurrency wallets to a specified account (likely your inheritor) that you had set up beforehand. The limitation for this method is the consistent replies you would have to give to the automated system.

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Mississauga Board of Trade
Mississauga Board of Trade
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