Protecting your digital assets: 7 legal tips and secure storage strategies
In the evolving landscape of digital finance, safeguarding virtual wealth has never been more critical. This article distills key legal advice and strategic storage solutions for digital assets, drawing on the wisdom of industry professionals. Discover how to legally fortify your online investments and ensure your digital legacy is secure.
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- Include Digital Assets in Estate Plan
- Create a Valid Trust for Digital Assets
- Keep Detailed Records of Transactions
- Set Up a Crypto Will or Trust
- Use a Trust or Legal Entity
- Know What Qualifies as Taxable Event
- Hold Crypto in Your Own Wallet
Include Digital Assets in Estate Plan
With the increasing importance of digital assets, whether it’s cryptocurrency, online accounts, or digital art, protecting them as part of your estate plan is crucial. One key legal tip I always give my clients is to explicitly include digital assets in their estate planning documents, especially when it comes to things like cryptocurrency and online accounts. Failing to address these assets can leave them in limbo when the time comes, potentially leading to significant challenges for your beneficiaries.
For example, I helped a client whose cryptocurrency was not mentioned in their will. When they passed away unexpectedly, their family struggled to access and manage the assets, which had grown in value. Had it been addressed, the family could have avoided a lengthy legal battle and had a clear path for accessing those funds.
As for securely storing and managing digital assets, using a hardware wallet is one of the safest methods. A hardware wallet stores your private keys offline, reducing the risk of hacking. I recommend that clients with substantial digital assets keep the keys in a secure location, like a fireproof safe, and ensure that trusted individuals know how to access them if needed. This simple step can prevent future headaches for your family.
Oliver Morrisey, Owner, Director, Empower Wills & Estate Lawyers
Create a Valid Trust for Digital Assets
The protection of digital assets which include cryptocurrency requires you to create an enforceable estate plan as an essential legal measure. Your digital asset inheritance process begins with developing a valid trust that determines asset owners and explains how to access your wallets along with their private keys. Having unregistered assets leaves your digital property vulnerable to permanent loss or shutdown, which prevents heirs from accessing it whenever an emergency occurs.
The storage solution that combines freezing temperatures with multi-signature wallet systems presents the best possible security approach for managing digital assets. Hardware wallet storage operates as cold storage to protect digital assets because it maintains assets offline. The combination of cryptographic technology protects digital assets through multi-signature wallets because these wallets need several approval signatures to execute transactions which enhances security measures.
Chunyang Shen, Finance Expert, Jarsy Inc.
Keep Detailed Records of Transactions
Many crypto holders overlook tax implications, which can lead to legal trouble later. In most countries, cryptocurrency transactions are taxable, including trades, staking rewards, and even airdrops. Keeping detailed records of every transaction is essential for reporting accurately and avoiding audits. Using a crypto tax software that integrates with exchanges can simplify this process and ensure compliance.
For storage, consider a decentralized custody service instead of keeping all assets in your own wallets. These services offer an alternative to exchanges while still providing security through smart contracts. Some allow users to set withdrawal limits or recovery options in case of lost access. It’s a good way to balance security with accessibility.
Shane McEvoy, MD, Flycast Media
Set Up a Crypto Will or Trust
As a Global Blockchain Delivery Manager, I’ve seen too many cases of lost crypto and hacked wallets. Here’s my #1 legal tip and secure storage method to keep your digital assets safe.
Legal Tip: Plan Ahead – Set Up a Crypto Will or Trust
Crypto isn’t like a bank account: if you lose access, it’s gone forever. A solid estate plan ensures your assets don’t disappear if something happens to you.
Use Trust & Will or LegalZoom to set up a digital asset will. Consider Casa Covenant for a secure crypto inheritance plan. A Power of Attorney (POA) can legally authorize someone to manage your assets if needed.
Secure Storage: Hardware Wallet + Multi-Sig = Maximum Security
Keeping crypto on an exchange? Risky. Hot wallet? Better, but still vulnerable. My go-to combo:
Hardware Wallets (Cold Storage) – Keep your keys offline and safe from hackers.
Best picks: Ledger Nano X, Trezor Model T, Keystone Pro
Multi-Signature Wallets – These add extra security by requiring multiple approvals.
Top options: Casa, Nunchuk, Electrum
Ivan Pilnikau, Blockchain Development Expert, Vention
Use a Trust or Legal Entity
Protecting digital assets, especially cryptocurrency, requires a proactive security and legal strategy. Here’s how I approach it:
One of the biggest risks with digital assets is ownership vulnerability—whether from regulatory scrutiny, inheritance issues, or cyber threats. Setting up a trust, LLC, or corporate structure can:
- Limit liability in case of lawsuits or creditor claims.
- Ensure seamless succession planning—if something happens to you, your digital assets remain accessible to beneficiaries.
- Provide tax benefits in certain jurisdictions, depending on how crypto holdings are classified.
Working with a crypto-savvy legal expert ensures compliance with evolving regulations while structuring ownership securely.
To prevent hacks and unauthorized access, cold storage wallets (like Ledger or Trezor) are the gold standard for securing digital assets. However, for an added layer of protection, I recommend:
- Multi-signature (multi-sig) wallets – Require multiple approvals before transactions can be executed, reducing the risk of a single point of failure.
- Geographically distributed backups – Store private keys in separate, secure locations to prevent physical compromise.
- Air-gapped storage – Devices that have never been connected to the internet eliminate remote attack risks.
For businesses handling large crypto portfolios, institutional-grade custody solutions with biometric authentication further enhance security.
As AI and blockchain continue to evolve, protecting digital assets isn’t just about security—it’s about future-proofing wealth.
Zeev Wexler, CEO, Wexler Marketing
Know What Qualifies as Taxable Event
As a legal tip, it’s important to know what qualifies as a taxable event and what does not. Holding ETH isn’t taxable, nor is holding a yield-bearing asset like rETH, wstETH, or other LST or LRT.
However, something like yield farming does create a taxable event.
Everything should be held in a cold wallet. There are a few reasons to make moves in a hot wallet, but those all involve day trading, which doesn’t apply to the average retail investor.
Matthew Ruley, Director of Content, Dypto Crypto
Hold Crypto in Your Own Wallet
Hold your crypto in your own wallet. This is literally what crypto was designed for. If you want to be fully aligned with why crypto exists in the first place, you need to take responsibility for your holdings and protect what you have by taking it off exchanges and holding them yourself. That means using a cold storage wallet or web wallets such as Metamask.
With these, you keep your private key in the form of your secret words somewhere safe, where nobody but you has access to them. There are many strategies on how to keep your secret words safe that could be their own book. But in general, keep them somewhere safe, where you have access and nobody else does, unless they are trusted friends or family.
Mike Bonadio, Owner, Mike Bonadio
