You may have seen those terribly unfortunate stories of crypto owners losing their seed phrases and not being able to access huge amounts of crypto funds. In this case, the crypto in question is pretty much a permanently lost cause. But, does the same go for an individual who passes away while in possession of cryptocurrency? Let's discuss what happens to your crypto when you die.

Crypto vs. Traditional Currency After Death

bitcoins on top of dollar bills

Think about the funds in your current bank account. When you die, you can either leave it to a person, people, or organization in a will or have it automatically split between your surviving spouse or close family if the will is absent. Alternatively, the funds will go directly to the state if there is no will and no surviving family (which happens a lot more often than you'd think).

So, does the same go for cryptocurrency?

The main element to consider here is your seed phrase. Nobody can officially or legally access your cryptocurrency funds without this seed phrase. Of course, crypto hacks do happen, but your seed phrase stands as a pretty significant security measure against unwelcome parties getting to your funds. Without this phrase, no one can access your crypto if you're no longer around.

Related: The Best Ways to Store Your Crypto Seed Phrases Securely

This has happened before and has caused the potential loss of billions of dollars worth of Bitcoin. In June 2021, a 41-year-old Romanian man named Mircea Popescu tragically drowned at a beach off the coast of Costa Rica. Popescu's death launched a huge discussion into what should be done with cryptocurrency when its owner dies.

But why?

Well, Popescu happened to be a pretty controversial crypto billionaire, with around $2 billion worth of Bitcoin in his possession. It is still not known where these funds will go, if anywhere. That's an awful lot of Bitcoin to miss out on. But, does this have to be the case? Will your crypto assets end up lost in the decentralized realm after you pass away?

Who Owns Your Crypto When You Die?

people holding bitcoin

While a decent amount of crypto out there is now lost forever (be it due to death or loss of seed phrases), this doesn't have to be how things go.

One option for securing the passing on of your crypto assets is to give your crypto wallet seed phrase to a very trusted individual in your life (ideally the one you want the crypto to go to). Doing so will ensure that this person will be able to access your funds and do what you have stipulated with them when you are no longer around to do so.

However, there are risks associated with this. Your trusted person could decide to take your seed phrase and use it to steal your funds while you're alive or could go against your wishes after you die. Therefore, it's important to fully educate yourself on the elements surrounding your crypto funds in the event of your death and ensure you make the right decision.

Related: China Has Banned Cryptos. Here's Why That's Good for Bitcoin

At the moment, there is no official way to name a legal beneficiary for your crypto funds, and it could be difficult for your relatives or trusted persons to find out if you even own crypto, given that the entire point of this currency is decentralization and anonymity. Furthermore, the general lack of regulation surrounding cryptocurrency also plays into the obscurity of its destination after the owner passes away.

You can, however, name a beneficiary in your will if you provide all the relevant passwords and information to access your funds, but the risks of this in terms of privacy must again be considered carefully.

Your Crypto Funds Are Precious but Vulnerable to Permanent Loss

It's important to remember that cryptocurrency is entirely different from traditional currency. And, because of this, it isn't treated the same way in the event of your death. So it's important to be aware of what may happen to your crypto in such a situation and consider what you can do to ensure it ends up in the right hands (if and hands at all!).