Isn't my Cryptocurrency already automatically protected?

This is a legitimate question.  The nature of Cryptocurrency is such that it makes it seem like there is no need to take any additional steps to protect it.  For example:

1. It is very easy to transfer virtually any amount of crypto to a myriad of wallet options, most of which would not be accessible by anyone other than you. 
2. There is almost no way for anyone to know who owns the wallets.
3. There is no way for a court to break-in to a wallet through legal action. 

However, this misses a very important point, and one that if you are not careful can land you in serious legal trouble, and even jail:

"The only way for you to protect crypto with just a wallet is to be willing to lie under oath!"

Consider also that when you purchase cryptocurrency, there is likely to be a record. Exchanges like Coinbase and Gemini are keeping records and will ultimately be reporting to the government. While these first few years may seem like the wild west, the reality is that transparency and accountability in buying and selling cryptocurrency is only going to become much more regulated.  This means that it is very likely that it can be discovered how much cryptocurrency you have purchased, when and for how much.  Combine that with your tax records, and a it's not too hard to imagine that the IRS and/or a court could come up with a pretty good picture of what you have.

But even if you mined all your crypto years ago and there is not a soul on earth who knows you have it, you still have a significant issue if you want to protect it.  It's called "Perjury", which is just the legal term for lying under oath - and it is very serious. 

If you were to find yourself with a judgement against you, and in a debtors exam, then you would almost certainly get a question like:

"Do you have any digital currency, cryptocurrency, NFTs or any other digital asset in any form or in any location, wallet, staking service, or other storage or investment location anywhere in the world?"

If you do, then the answer needs to be yes!  After which they will drill down until they know the exact amount of the currency, the location and who holds the keys and passwords. If you are the keyholder, then at that point they are free to run to the judge and ask him or her to order you to transfer the currency to them to satisfy the judgement. 

Again, it may seem tempting to just omit that you have anything, even under oath.  Or to admit to having less than you actually do.  The problem with that is that you are now risking your liberty and freedom from spending time is jail - because any lie is Perjury and it is a criminal offense punishable by jail. 

This is especially true when you have a much better, much safer and much easier option called an Asset Protection Plan.  By assigning your Cryptocurrency to your asset protection plan there would be no need to lie, commit Perjury or hide your digital assets.  You could tell the whole truth and still be certain that no judge could reach your cryptocurrency.  

The bottom line is that protecting cryptocurrency is like protecting any other asset, and needs to be done right from the beginning.  Just because crypto is temptingly easy to transfer away from a court, you still must still have the correct legal framework in place if you do not want to risk worse than losing your money - jail time!

Lodmell & Lodmell, PC is one of the nations leading Asset Protection Law Firms and the creators of The Bridge Trust®.  L&L serves clients nationwide and may be reached at [e-mail] or 602-230-2014.