Digital Assets and the Limits of Existing Regulatory Models
The article was authored by Suzanna Kirina, an independent journalist, and reflects her editorial assessment of the regulatory significance of Mr. Lyushenko’s submission to the U.S. Securities and Exchange Commission.
In recent years, the regulation of digital assets in the United States has evolved primarily around issues of market integrity, investor protection, and custody standards. Regulatory attention has focused on licensing market participants, cybersecurity requirements, fraud prevention, and safeguarding client assets held by custodial service providers.
At the same time, one critical stage in the lifecycle of digital assets remains insufficiently regulated: their management in cases of the owner’s death or loss of legal capacity. Despite the growing volume of digital assets held within custodial and quasi-custodial models, inheritance scenarios continue to be treated predominantly as matters of private estate planning.
This approach is increasingly inadequate in circumstances where digital assets form part of the broader financial infrastructure and intersect with wider public regulatory interests.
The Gap Between Private Law and Regulatory Architecture
Most U.S. states have implemented the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which formally recognizes the right of fiduciaries to access the digital assets of deceased or incapacitated individuals. At the same time, the Act does not establish uniform standards governing how digital assets held under custodial control should be transferred to heirs in a manner consistent with regulatory requirements, cybersecurity considerations, and the protection of third-party interests.
As a result, inheritance rights often exist in a purely formal legal sense, while their practical realization depends on the internal contractual policies of digital platforms. The absence of regulatory guidance generates legal and operational uncertainty, increases the risk of asset loss and disputes, and undermines trust in digital financial services.
A Regulatory “Blind Spot” in Digital Asset Custody
Custodial models for digital assets have largely been designed on the assumption of continuous control by the owner. Scenarios involving death or loss of capacity, although objectively foreseeable, are frequently excluded from the core architecture of access management.
Consequently, inheritance issues remain outside the focus of regulatory oversight, despite their direct connection to investor protection, market stability, and the management of systemic risk. The lack of minimum standards for verifying heirs’ rights and for the controlled transfer of access creates a structural vulnerability that extends beyond individual inheritance cases.
A Letter to the SEC as an Element of Regulatory Dialogue
Against this backdrop, in November 2025, legal researcher Dmytro Lyushenko submitted written comments to the Crypto Task Force of the U.S. Securities and Exchange Commission (SEC), outlining digital inheritance as an underexamined regulatory risk within the domain of digital asset custody. Unlike traditional approaches that treat inheritance exclusively as a matter of private law, the submission framed digital inheritance as a component of the broader regulatory architecture governing custodial models for digital assets.
The written comments were published on the official SEC website on November 16, 2025, as part of the Commission’s public regulatory consultation process. The document emphasized that, in the absence of regulatory guidance, inheritance-related scenarios are effectively governed by private contractual terms imposed by platforms, thereby undermining consistency of approach, transparency, and legal certainty.
The regulatory initiative reflected in this submission builds upon research and analytical work developed within NOTA LLC and NOTA Digital Currencies Research Center, Inc., a nonprofit research organization founded by Dmytro Lyushenko and Oleksandr Tuholukov. This institutional research base has focused on the legal and operational implications of digital-asset custody, including succession scenarios associated with death or loss of capacity, and on the need for minimum procedural benchmarks that can be integrated into custodial architectures.
The Substance of the Proposed Regulatory Approach
The initiative was not aimed at introducing detailed mandatory rules. Instead, it identified key areas that could be taken into account in the further development of digital asset regulation, including:
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recognition of death and loss of legal capacity as standard, rather than exceptional, scenarios of digital asset ownership;
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development of procedural benchmarks for verifying heirs’ rights;
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integration of controlled-access mechanisms into custodial architectures;
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alignment of inheritance-related issues with investor protection and financial stability objectives.
This approach repositions digital inheritance from a peripheral legal issue to a matter of systemic financial regulation.
Independent Expert Assessments
Scholars from various academic disciplines have drawn attention to the importance of addressing digital inheritance within the framework of regulatory governance, rather than solely through private law.
Professor Olha Andrieieva, Doctor of Political Sciences and Professor of the Department of International Information at the Educational and Scientific Institute of International Relations, Taras Shevchenko National University of Kyiv, observes:
“From the perspective of international information governance, digital inheritance constitutes a structural challenge that transcends national legal systems. The distinctive feature of this initiative lies in its treatment of digital inheritance as a matter of regulatory coordination rather than isolated legal compliance. Placing inheritance scenarios within the broader context of digital asset governance aligns with contemporary debates on transnational information regulation and institutional responsibility.”
From the standpoint of public policy, Professor Tetiana Komarova, Doctor of Political Sciences and Professor of the Department of Political Science at V. N. Karazin Kharkiv National University, emphasizes the institutional dimension of the issue:
“In public policy analysis, the absence of clear rules governing digital inheritance represents an institutional ‘blind spot.’ The significance of this initiative lies in identifying inheritance as a foreseeable governance risk rather than an exceptional matter of private law. Linking digital inheritance with investor protection and regulatory stability elevates the discussion to the level of state policy.”
The technical dimension of the problem is addressed by Professor Ihor Lutsenko, Doctor of Technical Sciences and Professor of the Department of Automation and Information Systems at Mykhailo Ostrohradskyi Kremenchuk National University:
“From the perspective of systems design and automation, the management of digital assets in cases of death or loss of capacity constitutes a foreseeable operational scenario that is often overlooked during system development. The value of this initiative lies in recognizing that inheritance-related access control must be integrated into the core architecture of custodial systems, rather than addressed through ad hoc or purely contractual mechanisms.”
Why This Initiative Matters
The significance of this regulatory submission lies not merely in the act of providing comments to a regulator, but in expanding the boundaries of regulatory discourse. Digital inheritance is framed as a factor that can directly affect trust in digital asset markets, the resilience of custodial models, and the effectiveness of investor protection mechanisms.
This approach reflects a more comprehensive understanding of digital assets—one that accounts for the entire lifecycle of ownership, from acquisition and custody to succession.
Conclusion
As the digital economy continues to evolve, the inheritance of digital assets can no longer be regarded as a peripheral issue. Ignoring this topic at the regulatory level creates legal and institutional risks that manifest most acutely in moments of vulnerability.
Integrating digital inheritance into discussions on custody standards and investor protection signals a gradual shift from transaction-oriented regulation toward systemic governance of digital assets. Regardless of future regulatory outcomes, the inclusion of this issue in federal-level regulatory dialogue represents an important stage in the evolution of the legal infrastructure governing digital assets.
Authoritative background information on Mr. Dmytro Lyushenko, including his scholarly publications, professional biography, and regulatory research, is publicly accessible through his official website and researcher profiles:
Official website: https://dmytrolyushenko.com
ORCID: https://orcid.org/0009-0007-2384-0036
