As digital wealth grows, a critical question is often overlooked: what happens to virtual assets after their owner passes away? Unlike property or gold, cryptocurrencies and other virtual assets don’t transfer automatically, leaving millions of dirhams locked out in the UAE due to missing access keys.
Amir Tabch, CEO of virtual asset service provider OFZA, and a seasoned executive with over 20 years of experience across large regulated financial institutions, digital-led startups, and crypto-native platforms, explains why this happens and what investors must do to avoid it.
Legally, how are crypto assets treated for inheritance?
Legally, crypto is treated as an asset of a personal estate. Inheritance follows the law or a will if available. However, practically, it all hinges on access; if the crypto is in self-custody or a personal wallet with no keys shared, assets become unreachable even if the family is legally entitled.
How big is the issue in the UAE?
We are seeing significant crypto inflows to the UAE due to its regulatory regime, but reliable numbers on lost access are hard to measure since it's rarely reported. Globally, analysts estimate 10% to 20% of Bitcoin is lost or inaccessible due to missing passports.
In the UAE, the strongest indicator of this being a serious matter is that there are formal solutions that are beginning to appear. DIFC courts have launched the digital assets will service in October 2024, explicitly aimed at virtual asset succession planning. It is a signal to us that the issue with the inheritance of digital assets is no longer theoretical; it is real, and it causes a problem.
Why is it that crypto is different from property and bank accounts when it comes to inheritance?
Bank accounts and property registries have been institutionalised, while crypto isn’t. Banks can freeze funds, verify heirs, and transfer based on court documents. Property registries can update ownership depending on legal processes. With self-custody crypto, the blockchain recognises control through cryptographic access, a private key. A court can decide who is entitled, but it cannot reset a password on a crypto wallet. This is the main difference here.
Does a will automatically grant family access to crypto?
Not automatically. A will helps establish who can receive the assets, but cannot provide the technical access. For regulated exchanges or custodians, heirs can claim via probate and ID checks, following provider processes. For self-custody, the will needs pairing with secure key access, or assets stay locked.
What usually goes wrong? Legal or technical barriers?
Usually both. Missing private keys, seed phrases, PINs, lost 2FA phones, or unknown wallet locations halt everything, even with clear legal entitlement. Innovations reduce risks without replacing inheritance law, like secure recovery documentation.
A few years ago, a gentleman threw his USB stick out and understood that he had bitcoin access key on it. He spent millions trying to get it back. So theoretically, yes, the assets can be lost in perpetuity.
Can inaccessible wallets be unlocked in the future?
It requires layered solutions. One, the legal system has to catch up when it comes to digital assets and inheritance. We have seen this in the UAE, especially in the free zone legal framework. For instance, the DIFC Court has enhanced the digital asset law.
More broadly, the UAE digital asset environment has matured, which helps create clear processes when assets are held with the regulated virtual asset providers.
The solutions that make crypto inheritable are in different layers. Layer one, is a legal layer, which is a will or succession framework that states who gets what and who is responsible for keeping it. Second is the access layer, because courts can’t unlock private keys. The third layer is the custody and workflow layer. Using regulated custodians or regulated exchanges can help because they can follow the procedures when presented with documents and legal paperwork about the rightful heirs.
So, the gap between who is entitled and actually getting the access is where technology can support execution. For example, we designed a nomination program as a technological, not a legal solution. It allows verified clients to pre-nominate beneficiaries and define allocations, so the assets are less likely to become inaccessible. It does not replace a will. It complements legal planning by improving the practical access continuity.
What more can exchange and virtual asset service providers (VASP) do?
Exchanges, VASPs, and regulated custodians already have a lot of identity verification. They do security checks and compliance processes, which positions them well to offer a structured succession and claims workflows for access certainty, without rewriting inheritance law.
This is the idea behind our nomination program. It’s about operational continuity; it’s not a legal substitution. When a regulated exchange, similar to what happens in traditional finance, delivers a court case for whatever reason, they have processes and documentation, but they will eventually allow access if the court documentation is right. What we normally see in the cloud file space, we need to be able to mirror in the device space.
What’s the single most important step crypto holders must take to protect their assets for their heirs? How would you securely pass on a key?
Just have a simple plan that combines legal and access clarity. Write a will, name a trusted executor, and store your recovery information securely so your family can actually access what you leave behind. At minimum, document where the assets are, which platforms, which wallets, and how they are accessed. Keep recovery information securely.
Do you see a future where digital assets are treated in the same way in the inheritance law as physical assets?
Legally, we are moving in that direction. Especially in the jurisdiction that recognises that class of assets and builds formal processes around them, like DIFC court’s legal initiatives. Practically, there will still be a difference whenever people self-custody. Traditional assets often have an institution that can transfer ownership. Self-custodied crypto depends on key access. The future looks like the inheritance law increasingly answers ‘who’ while better tools and workflows answer ‘how’. I think crypto needs both.
What is the better way forward for self-custodied crypto assets?
In the absence of a regulated exchange, a regulated custodian, or a regulated VASP, the will and the legal elements play a big role. If something happens to the initial owner, it can get very stressful and very confusing for the family members. They may find a phone but no password, an account but no recovery phrase, or a blocked wallet without authentication. So, leaving inheritance is as much an operational planning as it is legal planning, especially if it is a self-custodial wallet.
Does this need a shift in mindset, too?
It’s a new idea of sharing data and passwords. We were supposed to keep our data to ourselves, the value of our assets to ourselves. There is almost a human hurdle here.
You don’t have to share the private key and data. You can leave it in the will, state where the bank account is, and then the courts can enforce it. In our nomination program, an onboarded user can nominate an heir, for example, a spouse, and they have to accept that nomination. It is very similar to life insurance, where you specify that if something happens to me, 50% goes to my wife and 50% goes to my mother. In our nomination program, the person knows in advance that they have been nominated to inherit digital assets.