Ensuring the Safe Transfer of Crypto Assets After Death

While private keys are designed to be kept safe, there are still no legal frameworks or guidelines for passing digital assets to the next of kin. However, several projects are now developing solutions to this problem.

Proof of Death

The first step in ensuring the safe transfer of crypto assets after death is establishing proof of death. This is necessary to ensure that assets are handled by the deceased’s wishes and to prevent unauthorized access or fraud. In September 2022, California proposed a bill to allow county recorders to certify birth, death, and marriage certificates using blockchain technology, which is a step in the right direction.

There are currently three protocols developing solutions for this problem:

1. BequestFinance
2. GuardMyFund
3. Sarcophagus

BequestFinance:

BequestFinance offers on-chain will/estate planning for tokens and NFTs. It is backed by Mark Cuban and works by providing a customizable deadman switch for assets with a subscription model ($19/year) and a 1% cut on asset transfers. If the user doesn’t renew, assets can be claimed by recipients. The platform currently offers a one-click non-custodial wallet generation service for non-crypto native users, with opt-in notifications through email, Telegram, and Twitter, and it supports multiple blockchain platforms. The platform is in the beta launch and sets to go live in February. However, there are no documents released yet and no safety mechanisms to prevent internet inaccessibility from triggering transfers.

GuardMyFund:

GuardMyFund is an on-chain legacy planning protocol built by a team of five individuals. It allows users to designate verifiers via email and select inheritors based on percentages, with automatic fund transfers if verifiers confirm loss/death and are not denied by the primary user within a specified time frame, a 2.5% cut on transfers, and a referral program. However, emails are not secure, and “trusted” guardians can conspire together.

Sarcophagus:

Sarcophagus is an on-chain Deadman-Switch utilizing Ethereum and Arweave, focusing on data (private keys, etc.) as payload. They raised $5.5M via DAO tokens in January 2022 from PlaceholderVC, Lattice Fund, and others. They plan to allow users to upload data and set a trigger and beneficiaries. The assets will be released to them upon the trigger, which can be a death certificate, death oracle, or a manual trigger.

In Conclusion

While the topic of death and the transfer of crypto assets may not be a pleasant one, it’s essential to consider the possibilities and put plans in place. There are now several projects developing solutions that can help ensure that assets are handled by the deceased’s wishes and prevent unauthorized access or fraud. While these solutions are still developing, it’s worth keeping an eye on them and considering which one might be the best fit for your needs.