Even though the idea of self-custody of your crypto asset might align perfectly with the ideals of blockchain security, it also makes it practically impossible for anyone else to access your cryptographic assets.
In case of any mishappening or emergency, the beneficiary nominee would be allowed to access the assets.
Third-party e-nomination services such as Octowill enable crypto investors to nominate their loved ones as the beneficiary of their digital assets.
In the post-FTX crypto order, investors all around the world are moving towards decentralized wallets. The decentralization of crypto storage incites safety, security, and trust in the crypto space and takes back the power from centralized players. Even though the idea of self-custody of your crypto asset might align perfectly with the ideals of blockchain security, it also makes it practically impossible for anyone else to access your cryptographic assets.
Blockchain wallets are extremely secure. There have been cases in which users were locked out of their crypto wallets because they lost access to their private keys. This extreme level of security might become the bone of contention in case of an emergency in your absence.
This is where nominees of blockchain assets come into the picture. In this CoinGabbar blog, we are going to talk about the significance of having a nominee in your financial records and if is it possible to do so for your crypto wallet as well.
In finance, the nominee is an individual who is entrusted by an entity or firm to take over control of all the assets and securities held in its name. In case of any mishappening or emergency, the beneficiary nominee would be allowed to access the assets. Nominating a beneficiary is an important part of securing financial assets in the case of the death of the proprietor.
However, this is not a common practice amongst crypto investors to choose a nominee for their assets even in the case of millions of dollars worth of assets held in their cold wallets.
In centralized exchanges, there are no fixed rules for what happens with the crypto assets when any of the investors die. Some of the exchange even seizes all the assets of those users who are reported either dead or missing. Other digital wallets lock out the assets of such users forever and those assets get wasted. Sometimes in the case of centralized exchanges, they have to surrender all the digital assets of the deceased user to the government.
So as of now, if you are not making extra efforts to ensure that you have a nominee for your blockchain assets, there is no mechanism in place to make your cryptocurrencies available to those who deserve them the most. Even though declaring a nominee in almost all financial contracts is a norm, no attempts are being taken by the regulators to ensure that the assets of the users are secured even after his death.
However, you can nominate a beneficiary for your cryptocurrencies as long as you are using a centralized exchange that does have custody of your private keys. If your exchange or wallet has the access to your private keys you’d be able to mention your nominee in a non-probate contract. Third-party e-nomination services such as Octowill enable crypto investors to nominate their loved ones as the beneficiary of their digital assets.
On the contrary, none of the legal contracts can save up digital assets after the death of the investor if he has stored his digital assets in a non-custodial wallet and never shared the private keys with anyone. In this situation, all of the crypto assets would stay locked in that crypto wallet and no one could retrieve anything from it.
Having a nominee is extremely important even if you are in the perfect phase of your life. Nobody can predict what is going to happen tomorrow and that is why it is wise to have your nominee in case of any unfortunate event. Here are some of the benefits of declaring a nominee for your custodial wallets.
e-Nomination makes it easier for your loved ones to gain back control of your digital investments
It ensures that crypto funds are given to the rightful heir of your choice
what-are-cold-wallets-and-how-do-they-functionThird-party e-nomination services provide the family with all legal assistance for the smooth transfer of funds
e-Nominations are enforceable without probate and that makes the process easier
Life is unpredictable and uncertain situations can arrive when you expect them the least. Thus it is wise to safeguard your investment for your dependents
If you are a user of non-custodial wallets or hardware wallets, you can alternatively share your wallet’s private keys only with those you are willing to share all of your investments.
Cryptocurrencies are becoming the most popular method of value transfer on the internet and that makes nominating a beneficiary for your crypto assets more important. Cryptocurrencies are relatively new to other financial instruments that we have been using for ages and thus much attention has not been put into things such as this.
However, with time the need for such safety mechanisms will safeguard many families and dependents in case of unfortunate events.