A note of caution for all trustees of charities over crypto legacies
It is thought that 2021 saw the highest level on record of gifts to charity through cryptocurrency.
Whilst this gifting may represent a trend towards more people using crypto day to day, or the early financial successes of crypto investing, it must also come with a warning. We are still in the early stages of understanding when it comes to crypto, with The Charity Commission, HMRC, the FSA and the SRA all trying to get a handle on and keep up with this ever evolving financial landscape.
Charity trustees must be confident that firstly they know the source of the donation and secondly have sufficient safe guards and processes in place to deal with the crypto once it is in their possession.
The recent and dramatic fall in crypto prices may have seen associated and significant falls in the value of the charity’s balance sheet for those holding crypto through a donation or donations. Often charities are unsure as to what to do with the crypto once it is in their possession. Doing nothing is not a prudent or sensible option. As always the best practice is to have a clear legacy and investment policy in place to ensure the sources of funds are known and that funds are sheltered and protected from volatile markets with expert advice taken in relation to investment and reinvestment. Having clear policies in place will help ensure that Charities and their trustees are not exposed to potential money laundering, cyber attacks or financial risk associated with the handling of crypto gifts.
Whilst it may seem daunting for a Charity Trustee, it need not be, provided expert advice is taken at the earliest possible opportunity, with clear policies and safeguards put in place and regularly reviewed.
Contact our Charity team for all related enquiries today on 01202 525333 or email email@example.com. You can also contact our Wills, Trusts and Probate team by emailing firstname.lastname@example.org.
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