Wealthy crypto investors and entrepreneurs have increasingly sought offshore trusts for estate planning and tax efficiency, but trustees have remained reluctant to take on digital assets because of volatility, custody risks and concerns over the source of funds.
Summary
- Wealthy crypto investors are increasingly seeking offshore trusts to preserve assets across generations and reduce inheritance tax exposure.
- Trustees remain reluctant to accept crypto because of price volatility, custody risks and difficulties verifying the source of digital asset wealth.
- UK taxpayers sold £13.8 billion of crypto in the year to April 2025, with nearly 250 people recording capital gains above £1 million.
- Specialist screening tools can trace crypto transactions and trading histories, but trustees still face fiduciary duties to protect assets for future beneficiaries.
The Financial Times reported that lawyers and trust advisers are seeing more requests from people who made their fortunes through cryptocurrency trading, token investments and digital asset businesses and now want to move some of that wealth into conventional trust structures.
Trusts can separate assets from an individual’s personal estate and are commonly used by wealthy families to transfer wealth between generations. Depending on the structure and jurisdiction, they can reduce exposure to inheritance taxes.
The difficulty for crypto holders is finding trustees prepared to accept the assets.
Charlie Tee, a partner at law firm Withers, told the Financial Times that only a small number of trustees he had encountered were comfortable holding cryptocurrency. Some clients instead sell their tokens before placing the proceeds into a trust, though trustees can remain cautious even when the digital assets have already been converted into fiat currency.
Ronald Graham, a partner at Winston Taylor, said younger members of wealthy families have increasingly asked for trust assets to be invested in crypto. Some trust companies have hesitated over such requests because trustees are responsible for protecting assets on behalf of current and future beneficiaries.
Crypto wealth is moving into estate planning
The pool of investors facing such decisions has increased as large gains from cryptocurrency have created a new class of wealthy holders.
UK taxpayers disposed of £13.8 billion in crypto assets during the year through April 2025, according to figures from HM Revenue and Customs cited by the Financial Times. Most of those disposals were made by men under the age of 45.
Nearly 250 taxpayers recorded capital gains exceeding £1 million from crypto disposals during the period.
More recent HMRC figures showed 17,600 taxpayers reported £1.38 billion in taxable crypto gains for the 2024-25 tax year, with 240 investors accounting for £717 million after reporting gains of more than £1 million each, according to past crypto.news coverage.
The tax authority has been stepping up its scrutiny of the sector. Around 81,000 warning letters were sent to crypto investors suspected of underpaying taxes during the previous year, according to figures from accounting firm UHY Hacker Young cited in the report.
Estate planning creates a separate problem because crypto ownership depends on access to private keys. Unlike conventional accounts, assets held in a self-custody wallet can become inaccessible if the owner dies without leaving a workable method for heirs to recover the wallet.
A crypto estate plan can therefore require arrangements covering wallet access, private keys and instructions for beneficiaries alongside the legal documents used to transfer ownership.
Ripple board member and XRP Ledger co-creator David Schwartz raised a similar issue in August when he proposed an inheritance setup involving duplicate Bitcoin hardware wallets. Schwartz suggested giving the wallets to two trusted relatives while separately providing their shared PIN to trusted friends who would disclose it after the owner’s death.
Trustees face crypto fiduciary risks
For professional trustees, access to the assets is only part of the problem.
Trustees have fiduciary duties toward beneficiaries and are expected to preserve trust assets over long periods. Their responsibilities can extend beyond the person who created the trust to children, grandchildren and beneficiaries who have not yet been born.
Claire Randall, a partner at Farrer & Co, told the Financial Times that trustees taking on crypto-related wealth would need to establish how the money used to purchase the assets was obtained and ensure it was not linked to criminal activity.
Tracing that history can be more complicated when funds have moved through wallets, exchanges and other digital asset services, particularly when transactions occurred outside regulated financial institutions.
Crypto’s price volatility creates another concern. A trustee that accepts a concentrated cryptocurrency position may later face questions from beneficiaries if its value falls heavily, especially when the trust was established to preserve wealth over several generations.
Similar custody questions have become more prominent across the crypto market. Under self-custody arrangements, investors retain control of their private keys and do not rely on an exchange or another intermediary to return their assets. Losing the keys, however, can permanently remove access to the holdings.
Trust structures introduce another party responsible for managing that access while complying with legal and fiduciary obligations.
FTX collapse remains a concern for trustees
Past crypto failures have made trust companies more cautious about taking responsibility for digital assets.
Tee pointed to the collapse of FTX and the possibility of investors losing access to wallets as examples of risks that concern trustees.
FTX filed for bankruptcy in November 2022 after a liquidity crisis exposed problems involving customer assets and its relationship with trading firm Alameda Research. Its collapse led investors and institutions to reassess how cryptocurrencies were stored and who ultimately controlled the assets.
The failure contributed to increased attention on independent custody, wallet ownership and mechanisms such as proof of reserves. A proof of reserves system can provide evidence of an exchange’s on-chain holdings, although it cannot by itself establish all off-chain liabilities or guarantee that a company remains solvent.
Trustees must consider a different set of responsibilities because they can be legally accountable for investment and custody decisions made on behalf of beneficiaries.
Some specialist trust companies have started marketing services designed for digital assets, while compliance technology has made it easier to investigate the history of cryptocurrency transactions.
Crypto screening tools are improving
Andrew Horbury, chief executive of UAE-based Cavenwell Group, told the Financial Times that screening tools can trace transactions and help trustees establish how cryptocurrency was acquired.
Such checks can examine trading histories and compare them with the value of assets being considered for a trust, giving providers another way to assess the source of a client’s crypto wealth.
Trustees can use the information when conducting source-of-wealth and anti-money laundering checks, though Horbury’s comments came as traditional trust companies continued to weigh whether they were prepared to accept crypto directly.
Some providers remain more comfortable taking cash generated from a crypto sale than holding tokens inside a trust, while others remain cautious about proceeds if establishing their origin requires reconstructing years of digital asset transactions.
The central issue for trustees remains their responsibility to beneficiaries. Even where the source of the cryptocurrency can be verified and custody can be arranged, trustees have to decide whether holding an asset capable of large price swings is consistent with their obligation to preserve trust wealth over the long term.
