What happens to an investor’s crypto assets after his death?
I am an IT professional from Pune. I hold Bitcoin and Ethereum on an Indian exchange and some tokens in my personal wallet. If something were to happen to me suddenly, can my family inherit these holdings?–Name withheld on request
The Indian government does not recognise cryptocurrencies as legal tender. At the same time, crypto assets are not generally prohibited from being held or traded. Indian tax law recognises it as a virtual digital asset under Section 2(111) of the Income Tax Act, 2025, and property is understood broadly in Indian law to include intangible assets that have an exchangeable value. Being property in this sense, it can generally form part of your estate and pass to your legal heirs under a will or the law of succession. The general law of succession would apply to such assets, but the practical process of transferring them depends largely on the exchange or wallet through which they are held.
Exchanges generally hold users’ tokens as custodians, and courts have treated such holdings as held in trust for the user. This means the tokens remain yours and are not the exchange’s own assets. Your family would have to approach the exchange directly, and it will generally ask for proof of death, KYC documents and proof that they are the legal heirs, such as probate or a succession certificate. At present, there is no nomination facility for crypto, as there is for bank accounts or demat shares, and the process may differ from one exchange to another. In case of a dispute, courts can direct the exchange to preserve the assets, even where the platform’s terms provide for arbitration outside India, if there is a substantial connection with India.
Control over such tokens held in personal wallet lies with whoever holds the private key or seed phrase of the wallet, and there is no exchange or custodian that your family can approach. Even if your heirs are legally entitled to the tokens, the assets may be lost permanently if the key or seed phrase cannot be found. Legal title does not help without technical access, so it is important to plan during your lifetime how your heirs will be able to access the wallet.
Transfers of virtual digital assets are taxed at 30% under Section 194 of the Income Tax Act, 2025 (Section 115BBH of the Income Tax Act, 1961) with tax deducted at source at 1% under Section 194S. Exchanges operating in India are also required to register as reporting entities under the Prevention of Money Laundering Act, 2002 and follow the related KYC and reporting requirements. Your heirs should take tax advice on how inherited assets will be treated on receipt and on a later sale. India does not yet have a comprehensive law on crypto, so custody, segregation of assets and succession are still largely governed by general law and the terms of the platform.
You should record your crypto assets in a will, identifying your exchange accounts and wallets, and appoint a trusted executor. Private keys and seed phrases should not be written in the will itself, as it may become part of the court record. Instead, make secure arrangements for the executor to access them, such as an offline record kept with a trusted person or your lawyer, and update it whenever your holdings change. You should also keep records of your accounts, purchases and wallet addresses, and review these arrangements periodically.
Kritika Seth is the founding partner and Isiri Rajaneesh, associate at The Victoriam Legalis (TVL)
