May 9, 2022

Protecting your Crypto Assets 101

Anyone invested in cryptocurrencies has seen their wealth grow exponentially in just the first two months of the year. Therefore, any individual that has now found themselves in this sort of dilemma (a very good problem to have 😃) should take consideration into properly protecting & accounting for these assets.

Protecting your Crypto Assets 101

Crypto Isn't A Hobby Anymore

Cryptocurrencies like Bitcoin is no longer perceived as being a digital collectors item. Bitcoin has become a digital asset with a market cap quickly approaching $1 trillion. For some investors, the rise of crypto has resulted in life changing financial gains. However, most of these success stories and the many that follow haven't taken any serious action towards strengthening the financial & legal postures of their crypto portfolios. It's important to realize that all investors realize that crypto assets are not exempt from taxes, and more importantly, not out of reach against creditors, catastrophic judgements, ex-spouses, so on and so forth.

Domestic Asset Protection Trust to the Rescue

A Domestic Asset Protection Trust (DAPT) is traditionally how the über-wealthy have protected their mass fortunes from external threats. A DAPT (or Self-Settled Spendthrift Trust) allows you, the grantor (or creator) of the trust to also be the primary beneficiary. This allows you to remove yourself as the owner of your crypto assets by re-titling them into the Trust, while still benefitting financially from those respective assets. Ultimately, this allows you to position yourself akin to highly successful entrepreneurs that preach the "own nothing, control everything" mantra.

Take a look at our "Asset Protection Guide" to learn how you can set-up your own DAPT in Nevada to protect your crypto and any other assets within your portfolio (ie. real estate).

Protection From Creditors & Ex-Spouses

As mentioned, you'll no longer be considered the rightful owner of the crypto assets you've transferred into your DAPT. You'll be "poor" on paper, meaning that if a creditor, ex-spouse or frivolous lawsuit surfaces attempting to attack your wealth, they'll come to the quick realization that you do NOT own any assets. This is the beauty of leveraging a Domestic Asset Protection Trust to protect your crypto investments. It is worth mentioning that in order for your crypto assets to be protected from your ex-spouse(s), it must not be considered marital property, meaning that you must have acquired and transferred the crypto into your DAPT prior to marriage.

Protections From the Taxman

Your wealth can't be taxed if you don't own any. States across the U.S. are looking to impose wealth taxes on their residents in an attempt to raise tax receipts. How is California, or any other state for that matter, going to tax wealth that sits within a DAPT created in Nevada? The answer is that California officials are going to have a very difficult time taxing assets that are legally owned by a distinct entity created & residing outside of state lines. The use of a DAPT in these situations is going to become ever more popular as state governments look for more ways to tax the wealthy.


Don't procrastinate in protecting your crypto assets. Loose monetary policy employed by central banks, the push towards decentralization, and many other factors may likely keep contributing to the exponential growth of your crypto portfolio. Set up your own Nevada Domestic Asset Protection Trust!

Michael Iglesias
Michael Iglesias

He heads Engineering at Lightbeam; formerly a Senior Engineer at McKinsey Cloud and lives in the Bay Area.

Manage your Crypto like how the top 1% does 👉