As our lives become increasingly digital, we are accumulating more and more digital assets. These assets include anything that can be created and stored digitally that has value. Illustrations, videos and audio all come under this umbrella. So does cryptocurrency, non-fungible tokens (NFTs) and tokenised assets.
Anyone who owns or creates digital assets needs to be aware of legal implications. Let’s have a quick run through it.
Digital asset ownership
If you dabble in cryptocurrency, you’ll need to be aware of the British tax laws surrounding this. If you sold crypto for more than you bought it, you will probably have to pay capital gains tax on it, though. If you made a loss, your tax may only be minimal.
Trading very high cryptocurrency amounts may be classified as “exceptional circumstances” by HMRC. This means income tax may apply instead.
If in any doubt about legal matters concerning digital assets like crypto, don’t be afraid to reach out to lawyers with relevant expertise.
Estate planning and digital assets
When estate planning, it’s very important that you remember to include your digital assets.
These days, practically everyone has a digital asset. Your email accounts and social media accounts come under this category! In your Will, you should specify how your loved ones can access these accounts and what you would like them to do with them. You can make it simpler for them by using a password manager for every account so that they only need to know one master password to gain access.
Take an inventory of all your digital assets to get started. These may also include:
- Air miles
- Hotel loyalty awards
- Online buying or selling accounts like Etsy and eBay
- Cloud-stored documents
- PayPal accounts
- NFTs such as digital artwork
With a solid inventory in place, your attorney can help you decide what should happen to each digital asset after you pass away.
Privacy and data protection
Anyone with digital assets (and as we mentioned, that’s just about everyone!) needs to know how to protect them.
Important files, graphics and media should be password-protected. Going one step further and protecting them with multi-factor authentication is a great extra. Passwords can only do so much, so a more sophisticated approach is wise.
If you are a business owner, you have even more to think about. Make sure you stay on top of annual audit trails. This is a crucial way to track network and system activity to clamp down on anything that looks suspicious.
Intellectual property rights
Intellectual property laws protect most types of digital assets. You automatically have copyright protection if you are the creator or first owner of the asset. If you created the work as part of your employment to someone else, though, you’re unlikely to be the rightful owner.
However, the sticking point often comes when people need to prove that they have this right. For this reason, you should always consider whether it’s worth using the copyright symbol and a disclaimer that states that all rights are reserved and that the work may not be reprinted, reproduced or used without explicit permission.
Whatever the scale of your digital asset ownership, it’s best to have a long-term vision. It’s up to you to decide how to protect them, comply with legal implications and pass them on.