Issues And Strategies: Trustees, Digital Assets And Fiduciary Duties

Notwithstanding the turbulent past few months, which have seen roughly $2 trillion worth of value disappear from the digital asset ecosystem, we are still seeing an increase in enquiries by high net worth individuals ("HNWIs") wanting exposure to digital assets.

However, for this asset class, trustees and those advising HNWIs face a set of unconventional types of risk (including extreme volatility, cyber security, fraud, scammers and hackers) that are quite different to those that need consideration for more traditional investments such as real estate, art, bullion, stocks, bonds and ETFs.

The question that arises: how do trustees administer such a risk-bearing asset class, whilst at the same time satisfying their general fiduciary duty to "...observe the utmost good faith and act en bon pére de famille" and their statutory duty to"subject to the terms of the trust and to the provisions of this Law [...] (b) preserve and enhance, so far as is reasonable, the