INTRODUCTION
Somewhere in India, a man passes away unexpectedly. His family knows he invested in cryptocurrency over the years. In his room, there is a hardware wallet containing Bitcoin worth ₹30lakh. The problem? Nobody knows the password or the 24-word recovery phrase needed to access it. The money isn’t stolen. It isn’t destroyed. It’s simply locked forever.
This is not a hypothetical situation. It is becoming more common as more people invest in digital assets like Bitcoin and NFTs. While traditional assets such as bank accounts, property, and shares have clear inheritance procedures, cryptocurrency creates a unique challenge. Even if the law says an asset belongs to your heirs, technology may prevent them from accessing it.
So, can cryptocurrency be inherited in India?
The short answer is yes. However, the practical reality is much more complicated.
WHAT MAKES CRYPTOCURRENCY DIFFERENT?
Unlike money in a bank account, cryptocurrency is not controlled by any bank, government, or company. Ownership depends entirely on a private key—a secret digital code that allows access to the wallet. Think of it like a highly secure digital locker. If you have the key, the assets are yours. If the key is lost, the assets become inaccessible forever.
This creates a major challenge for inheritance. A house can be transferred through legal documents. A bank account can be released through court orders. But no court can force a blockchain network to unlock a wallet without the correct private key.
IS CRYPTO A LEGAL “ASSET” UNDER INDIAN LAW?
This question is important for inheritance, because you can only inherit something that the law recognizes as property. Although India still lacks a dedicated cryptocurrency law, the government has indirectly recognized crypto as an asset.
The Finance Act, 2022 amended the Income Tax Act, 1961 to introduce Section 2(47A), which defines “Virtual Digital Assets” (VDAs) – a category covering all cryptocurrencies and NFTs. Gains from cryptocurrencies and NFTs are taxed at a flat 30%, with no deduction for expenses (except the cost of acquisition) and no set-off permitted against other income and a 1% TDS on VDA transfers over ₹10,000 in a year also applies[1]. The government, by taxing these assets, has implicitly recognized their existence as property with economic value.
Furthermore, the Supreme Court of India in Internet and Mobile Association in India v. Reserve Bank of India (2020) 10 SCC 274 struck down RBI’s 2018 banking ban on crypto, holding that it was disproportionate and violated the freedom to carry on trade and business under Article 19(1)(g) of the Constitution.[2]
The recognition of Virtual Digital Assets under Indian tax law also carries broader implications for succession disputes. Once an asset is recognised for taxation purposes, it becomes increasingly difficult to deny its economic and proprietary character within inheritance proceedings. This strengthens the argument that cryptocurrency should be treated as part of a deceased person’s estate.
Therefore, while crypto remains lightly regulated, there is a strong legal basis to treat it as property that can be inherited.
THE SUCCESSION LAWS THAT APPLY
India does not have a single unified succession law. The applicable law depends on your religion.
- Hindus, Sikhs, Jains and Buddhists are governed primarily by the Hindu Succession Act, 1956.[3]
- Christians and Parsis generally fall under the Indian Succession Act, 1925.[4]
- Muslim Personal Law governs Muslims.
None of these specifically mentions cryptocurrency. However, they all broadly cover movable and intangible property, which means crypto can reasonably be included within their scope. Under intestate succession (dying without a will), crypto would be distributed to legal heirs the same way any movable property is — according to the applicable personal law.
THE REAL PROBLEM: ACCESS
This is where legal rights and practical reality collide. Suppose you leave a valid will stating that your Bitcoin should go to your spouse or heir. they produce the will in court. But if you didn’t also leave behind the private key or word phrase in a form they can find and use, the inheritance is worthless.
The law can only determine who owns the asset. No court in the world can order a blockchain to do anything. The network is decentralised, ownerless, and runs on cryptographic consensus. Without the private key, the inheritance becomes practically worthless.
This creates three distinct practical scenarios at the time of death:
- Self-custodied wallet – If the owner personally controlled the private keys, access depends on whether the owner shared or recorded the details before death. If not, access is usually impossible.
- Cryptocurrency held on exchanges- When crypto is held on platforms like CoinDCX or CoinSwitch, the crypto functions as a bank account. Heirs can approach the exchange with legal documents like a death certificate and a succession certificate.
- Institutional or Multi-signature Wallet – These systems often include built-in recovery or succession mechanisms, making inheritance easier than with fully self-controlled wallets.
THE SUCCESSION CERTIFICATE AND WHAT IT ACTUALLY GETS YOU
Under section 370 of the Indian Succession Act, 1925, a Succession certificate issued by a civil court grants the holder authority to deal with the debts and securities of the deceased.[5] It is the standard instrument used by the heirs to access a deceased person’s financial assets when no will exists.
For crypto held on exchange, a succession certificate combined with other legal documents like death certificate, identity proof and relevant KYC documentation of the deceased – is sufficient to initiate a transfer request. The exchange is a legal entity in India and can be compelled by law to comply.
The actual problem is self-custodied crypto. A succession certificate is physically useless if you can’t unlock the hardware wallet.
However, the increasing use of decentralised finance (DeFi) platforms presents additional succession challenges. Unlike regulated cryptocurrency exchanges, many DeFi platforms operate without central intermediaries capable of verifying inheritance claims or facilitating asset transfers. Consequently, heirs may possess a valid legal claim to digital assets while remaining practically incapable of accessing them.
WHAT CAN BE DONE RIGHT
If you own cryptocurrency, a few simple steps or precautions can save your family significant trouble:
- Write a registered will that clearly mentions the names of your crypto assets.
- Store your word phrase in a sealed envelope with a trusted person- your lawyer or a bank locker- with instructions to deliver it to only named heirs after occurrence of an event
- Register a nominee on the centralised exchange wherever the platform supports it.
- Consider a multi-signature wallet for large holdings.
CONCLUSION
Can you inherit cryptocurrency in India? In principle – yes. Current succession laws, tax provisions, and digital record recognition under the Information Technology Act provide enough legal support to treat crypto as inheritable property.
However, legal ownership alone is not enough. The biggest challenge is access. If heirs cannot find the private keys or recovery phrases, even a successful court order may not help them recover the assets.
Until India introduces specific laws for digital asset inheritance, the fate of many crypto holdings will depend less on legal rights and more on one simple question: Did the owner leave behind a way to access the wallet?
Author(s) Name: Ishika Garg (Maharishi Markandeshwar (deemed to be) University
References:
[1] Finance Act 2022; Income Tax Act 1961, ss 2(47A), 115BBH and 194S
[2] Internet and Mobile Association of India v Reserve Bank of India (2020) 10 SCC 274
[3] Hindu Succession Act 1956
[4] Indian Succession Act 1925
[5] Ibid s 370