The rising importance of virtual assets

HMRC have recently announced that as of May 2021 their Statement of personal assets, Certificate of financial accounts and Certificate of financial cards forms will be amended to include virtual assets.

What are virtual assets?

Virtual assets are assets such as electronic money and wallet accounts, internet and money handling accounts and crypto assets, all of which will be included on HMRC’s amended forms. This means cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin, in addition to online payment services like PayPal will now be included in statements of assets.

Why do virtual assets need to be included?

Virtual assets are fast becoming a popular way of holding financial assets. HM Treasury have found that, although there have been rapid changes in the virtual assets market over the last couple of years, this has been accelerated by the COVID-19 pandemic and the mass movement to using online services. Therefore, it is understandable that HMRC have found it necessary to amend their forms to include these assets or risk ignoring a growing area in the way assets are being held.

For cryptocurrencies in particular, there is a real risk that significant assets will be lost if there is no record of where they are held or the means of accessing them. A cryptocurrency wallet holds ‘keys’ which allow access to the funds. It is certainly possible that these assets would stay completely invisible to the executors if they are not listed in a will.

Comments

• The growth in virtual assets could change the way that financial markets operate in the future.

• Although the growth in virtual assets looks set to benefit the financial markets there are concerns about protecting consumers, the stability of the market and regulation of virtual assets. HM Treasury are in the first stages of consulting on these issues.

• Individuals should make sure they are keeping an adequate record of their virtual assets as it can prove difficult for those left behind and their executors to identify all of their assets on their death.

• Keeping a record will assist executors with carrying out their duties to collect in and distribute the assets as per the terms of the deceased’s Will.

• Even if you do not have a Will (we recommend everyone puts a Will in place!) keeping a record of virtual assets is essential in guaranteeing the assets are not lost forever online.

Further information can be found here:

UK regulatory approach to crypto assets and stablecoins: Consultation and call for evidence

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/950206/HM_Treasury_Cryptoasset_and_Stablecoin_consultation.pdf

Next Steps

Victoria Upton is a Private Client Solicitor at Spratt Endicott Solicitors, to contact Victoria regarding anything discussed in this article please email vupton@se-solicitors.co.uk.

*Disclaimer: While everything has been done to ensure the accuracy of the contents of this article, it is a general guide only. It is not comprehensive and does not constitute legal advice. Specific legal advice should be sought in relation to the particular facts of a given situation. The information is accurate at date of publication, 25th of June 2020 .