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Over 106 million people worldwide hold cryptocurrency, as of 2021, and that figure is only set to boom further as digital assets become increasingly nestled into the mainstream.

Withcrypto's growing popularity, a rising number of people will no doubt be wondering what happens to your cryptocurrency stash afterthey die. For the living, there may also be some curiosity about whether its possible to inherit cryptocurrency from a deceased relative.

But first, a disclaimer! This is not financial advice. Please consult professional financial and legal advice to understand the risks involved. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.

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If you're looking to inherit crypto held in a deceased person's wallet, whether its an offline (cold) or online (hot) wallet, its important to know the private key.

In short, the private key is like a password; a cryptographically generated code that grants access to your crypto. There is also a seed phrase, a human-readable representation of a private key that consists of 12, 18, or 24 words generated by your cryptocurrency wallet that stores all the information needed to recover cryptocurrency funds.

Without the key or seed phrase, a deceased person's cryptocurrency will be inaccessible and remain lost on the blockchain. Just like a password, however, you shouldnt tell people your private key or seed phrase unless you wish to give them total access to your portfolio.

You may have heard the remarkable story of Gerald Cotten, a cryptocurrency trader who died suddenly aged 30, leaving up to US$190 million worth of his clients crypto permanently locked in inaccessible offline wallets.

Owners of crypto assets who die without a Will or an available private key may create a similar predicament behind, leaving their beneficiaries unable to get their hands on the cryptocurrency.

If the cryptocurrency is in a coin exchange,rather than a wallet, things may be a little easier (if not less secure).

If you hold your crypto on an internet-based coin exchange, like Binance or Coinbase, you don't actually own your private keys they do.When obtaining a deceased person's account, you are effectively relying on that company to hand over the crypto.

Coinbase, a cryptocurrency exchange and provider of wallets, has created a protocolallowing the transfer of an account in the event of death.

However, the responsibility lies with the account holder and beneficiaries need a few things to obtain the assets: the persons death certificate, their latest Will and Testament, and/or Probate Documents, plus a signed letter by the person named in the Probate Documents instructing Coinbase on what to do with the balance of the Coinbase account.

If a person doesnt mention their crypto assets in their will, its very unlikely youll be able to obtain them legally.

Just like any asset, like stocks or gold, Bitcoin, Ether, and other cryptocurrencies can be subject to tax. However, most countries have still not fully got to grips with the intangible qualities of digital assets and the law can be relatively hazy in places.

The UK recently laid out a policy paper called Cryptoassets: tax for individualsstating cryptocurrencies can be subject to inheritance tax and capital gains tax.

The Internal Revenue Service (IRS) in the US also considers cryptocurrency holdings to be property for tax purposes, meaning your virtual currency is taxed in the same way as any other assets you own.

However, different countries have different rules and different loopholes. In the UK, for instance, crypto assets left to a married partner will benefit from 100 percent Inheritance Tax relief, provided the surviving spouse is a permanent UK resident.

So, if youre looking for particular exemptions, its best to check laws in your jurisdiction and, if in doubt, seek legal advice.

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What Happens To Cryptocurrency When You Die, And Can You Inherit It? - IFLScience