As Bitcoin’s Price Surges, Affluent Investors Start to Take a Look

Several firms provide secure key storage — or custody services, as they’re known with other financial assets. Two Ocean’s system, Mr. Revill said, combines humans and algorithms to securely move cryptocurrencies from “cold” storage, when the device holding the keys is not connected to the internet, to “hot” storage, where the Bitcoin is connected to the internet so a transaction can take place.

Tom Jessop, the head of Fidelity Digital Assets, a part of the financial services firm Fidelity Investments that acts as a custodian for cryptocurrencies and operates funds that invest in the currencies, said the firm’s strategy is to manage operations behind the currencies so they were no different from stocks or bonds.

“It approximates the utility of any other asset you own,” Mr. Jessop said. “There’s an account number, an ability to measure and monitor it, and your financial adviser knows about it and is aware of it in terms of an estate plan.”

Part of most estate plans is a series of trusts, which hold various assets for future generations. The trustees charged with carrying out the directives in trust agreements have a couple of major concerns about the currencies. One involves the liability that comes with a breach or loss of a key, said Frazer Rice, Northeast regional director at the trust company Pendleton Square Trust. But another is prudently managing the asset itself, given its volatility, in the context of other assets in the trust.

“We’re used to dealing with stocks and bonds and illiquid assets,” he said. “Now, crypto is intersecting with estate planning and legal tools that are hundreds of years old. People are really going to have to think through and ask what does it mean for someone else to be responsible for their crypto when they’re dead.”

For trust planning, investors who keep their keys on a thumb drive and lock it in a safe could find themselves in the same tax situation as people who put real property in trust. Jurisdiction over disputes rests with the location of the property, not where the trust was set up.

For years the State of New York has tracked where valuable art hangs. Someone may officially be a resident of Florida, which has no state estate tax, but if a $100 million painting hangs in that person’s apartment on Park Avenue, New York will tax it. The same could be true for where a thumb drive is stored, Mr. Rice said.

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