New international reporting rules requiring overseas crypto-asset businesses to share details of UK customers with HMRC could help solve a growing problem of heirs failing to inherit cryptocurrencies owned by relatives, says TWM Solicitors, a leading private wealth and family law firm.
Executors are increasingly encountering estates where they suspect the deceased owned cryptocurrency but have no practical way of identifying where those assets are held.
Unlike traditional financial assets, crypto-assets are frequently associated with wallet addresses rather than an individual’s name and are protected by private keys or complex passwords. With crypto assets now so widely held, the problem of crypto assets being lost and never passing to the estate’s beneficiaries is becoming a more regular issue. It can lead to families losing crypto assets worth tens or even hundreds of thousands of pounds.
The problem can often be avoided if the owner leaves full details of their crypto investments and access arrangements with a solicitor or a trusted relative, but this is still rarely done.
A new international reporting regime, the Crypto-Asset Reporting Framework, could help to resolve this situation, says Duncan Mitchell-Innes, Deputy Head of Private Client and Partner at TWM Solicitors, by providing HMRC with information about many overseas crypto holdings owned by UK taxpayers.
From 31 May 2027, HMRC will automatically start receiving comprehensive data on UK residents from cryptocurrency service providers located in 52 jurisdictions, including the Channel Islands, the Cayman Islands, Ireland and Lichenstein.
A further 15 jurisdictions will start providing information to HMRC in 2028 including Singapore, Switzerland and Gibraltar. This information will include the investor’s full transaction records, name, address and National Insurance number.
HMRC has confirmed to TWM that it will respond to requests about crypto assets from solicitors who are undertaking a probate.
Duncan says: “We’re seeing more estates where cryptocurrency forms part of the assets that executors are trying to identify and administer. As ownership becomes more widespread, this is an issue we’re encountering more regularly.”
“If HMRC does provide the information it receives from overseas crypto-asset businesses to executors, it could help address a growing problem for families trying to administer estates that include cryptocurrency.”
“At the moment, very few overseas crypto-asset service providers will provide information to an executor – they often won’t even confirm if an individual held assets with them.”
“With most traditional financial assets like savings or shares, the procedures for undertaking a probate have been long established. However, overseas crypto businesses generally do not cooperate with the process like a UK bank will.”