High Net Worth Family Office: How should investors respond to legal and tax risks if XRP rises to $100?

In November 2025, several high-net-worth family offices in the United States reevaluated the long-term holdings risk of XRP. The Digital Ascension Group (DAG) specifically warned that if XRP rises to $100 in the future, many retail investors might encounter significant troubles due to tax regulations, asset vesting, legal disclosure obligations, and other issues before profits arrive.

Since the IRS defined cryptocurrency as “property” in 2014, every sale, exchange, and even daily consumption behavior by investors constitutes a taxable event, resulting in many families holding significant XRP being effectively exposed to high regulatory risks. This article will systematically review IRS rules, asset protection structures, family wealth inheritance mechanisms, and how WY LLC (Wyoming Limited Liability Company) has become a key tool for high-net-worth investors to protect XRP, providing in-depth analysis in conjunction with industry background.

How IRS Property Classification Rules Redefine the Risk Landscape of XRP

The key point that family offices in the United States have been intensively explaining to clients recently is the IRS's Notice 2014-21, which was launched in 2014. This rule seems technical, but it completely changes the legal and tax treatment of crypto assets.

Firstly, the IRS classification means that crypto assets are no longer viewed as “currency” but as “measurable property.” This determination means that any transaction—regardless of how small the amount—will trigger a “taxable event.” For example, if an investor uses XRP to pay for a $20 purchase, they must calculate the gains or losses based on the fair market value at that time and compare it with the cost basis for reporting. Many retail investors have never really calculated these details, leading to significant omissions in their tax records. Once the market warms up in the future, the tax authorities may conduct retrospective reviews, which could likely result in high penalties or additional tax burden.

Secondly, DAG pointed out that most families holding six or seven-figure XRP commonly face the same problem: they store a large amount of assets in personal cold wallets rather than under legal structure protection. This “naked Holdings” seems secure, but under the U.S. legal system, it can easily become a litigation risk loophole. Whether it is a car accident, a business dispute, or a civil claim, as long as the case enters the court phase, the judge has the authority to require asset disclosure. Since the assets are registered under personal names, wallet addresses, wallet keys, and asset quantities may all be required to be disclosed.

Moreover, it is even more severe that some retail investors mistakenly believe that “claiming to have lost the private key” can bypass disclosure or enforcement. However, DAG emphasizes that this is a very dangerous gamble. Judges can fully detain individuals for “contempt of court” until they complete the disclosure or enforcement of the freeze order. There have been similar cases in the United States where personal assets were frozen for months or even years during the investigation, during which trading was not allowed and individuals could not benefit from asset appreciation.

From the perspective of wealth management, the classification of property by the IRS is essentially a “double-edged sword.” On one hand, it brings cumbersome tax obligations; on the other hand, it also offers some highly valuable wealth planning opportunities. For high-net-worth investors, if these rules are used properly, they can actually create intergenerational tax buffers and asset appreciation space.

Wealth Transfer Strategies for High-Net-Worth Families Holding XRP: From Step-Up Basis to Collateralized Lending

Against the backdrop of seemingly harsh tax burdens, DAG points out that the IRS's property classification has also unlocked many tools that wealthy American families have been using for decades, and that crypto assets—including XRP—are equally applicable.

Among various wealth planning mechanisms, the “Step-Up Basis” is the most critical one. When an investor passes away, the heirs calculate the cost basis not based on the original purchase price, but on the “market value at the time of death.” For example, if a family bought XRP at $0.50, and when the holder passes away, XRP stands at $100, the heirs will use $100 as the new cost basis, thus exempting all capital gains tax on this rise. This is a highly tax-advantaged mechanism for families with large XRP holdings.

Secondly, DAG encourages investors to “borrow rather than sell.” This has become a standard strategy in the realm of traditional billionaires. For example, billionaire Elon Musk used approximately $40 billion worth of Tesla stock as collateral to finance the acquisition of Twitter (now X). The private banking services for crypto assets are expanding, and top assets like XRP can be used as collateral at certain institutions. Investors gain liquidity through collateral while continuing to hold their assets, avoiding triggering taxable events, which is a strategy for enhancing asset efficiency and deferring tax burdens in the long run.

Furthermore, large XRP Holdings holders can combine these tools: for example, first placing assets into a legal structure, then obtaining dollar liquidity through collateralized loans, while maintaining a cost-based strategy to optimize wealth transfer costs. This is precisely the comprehensive planning path that family offices are constructing for their clients.

Overview of Key Mechanisms in Family Wealth Planning

• Step-Up Basis: The heir uses the price at the time of the holder's death as the cost basis.
• Crypto asset collateral financing: using XRP as collateral to obtain USD liquidity
• Tax deferral mechanism: Avoid short-term tax burdens from sales
• Structured Trust Inheritance: Reduce estate taxes and avoid lengthy probate processes.
• Legal structure isolation: Avoid litigation and personal asset recovery through entity holdings.

Family offices emphasize that wealth planning is not something to be done “after becoming wealthy,” but rather “to be conducted simultaneously during the asset accumulation process.” Many families suffer significant losses in legal disputes or find that their assets cannot be passed on to the next generation because they neglect this point.

Why WY LLC Has Become a Core Protective Mechanism for XRP Investors

The Wyoming Limited Liability Company (Wyoming LLC) has become one of the most popular legal structures among high-net-worth investors in crypto assets in recent years. DAG's view is very clear: placing XRP and other crypto assets into a WY LLC is an effective way to reduce legal risks and strengthen asset isolation.

First of all, WY LLC has the strongest Charging Order Protection in the United States. In other words, when an LLC member is involved in a lawsuit, creditors cannot directly seize the assets within the LLC; they can only wait for potential future distributions from the LLC, which has no obligation to distribute. This has a significant protective effect in practice, especially suitable for families storing high-value crypto assets.

Secondly, LLC can also serve as a wealth transfer tool. DAG reminds that under current tax law, individuals can gift up to $13.6 million in assets to family members each year (a total of $27.2 million for couples) without triggering gift tax, while also gradually removing assets from the taxable estate during their lifetime. This means that large amounts of XRP can be safely and structurally distributed to the next generation during the holder's lifetime, without incurring significant tax burdens due to concentrated transfers.

Furthermore, DAG recommends incorporating WY LLC into a Revocable Living Trust to ensure that ownership can be quickly transferred after the holder's death. The trust mechanism can avoid the lengthy Probate process, which typically takes 6 to 24 months and costs about 3%–7%. This process is not only time-consuming but may also result in the assets being frozen during execution, thereby missing opportunities in market fluctuations.

Asset protection experts point out that the volatility of crypto assets makes probate particularly dangerous. For example, if XRP rises from $20 to $70 during probate and then falls back to $30, the heirs not only miss out on profits but may also be forced to pay taxes based on the lower valuation during the execution period, resulting in double losses.

Family offices emphasize that they have witnessed multiple families lose large amounts of cryptocurrency assets for not having established LLCs or trusts in advance; these families often believe in “planning when the assets rise,” only to regret it later due to legal orders, tax recaptures, or unforeseen events.

Trends in Legal Risks of Cryptographic Assets in the Changing Market Environment

The reminder of DAG is not a coincidence. Since 2023, US regulators have been moving toward institutionalizing and refining their attitude toward crypto assets, aiming to align the tax reporting, legal structure, and vesting relationships of crypto assets with those of traditional assets. This trend has become even more apparent entering 2024-2025.

First, mainstream CEXs and payment tools are integrating more tax APIs, making users' on-chain activity records more transparent, and the space for “tax evasion” will quickly shrink in the future. Secondly, several federal state courts have begun to treat crypto assets as “enforceable property” when hearing civil cases related to crypto assets, and are publicly reviewing wallet records. This means that investors' past belief that “wallets have high privacy and are hard to track” is no longer valid.

At the same time, the U.S. judicial system is accelerating the institutional development of digital asset inheritance, marital property, and bankruptcy liquidation. In the past two years, multiple court rulings have required the provision of wallet access, with some even demanding assistance to law enforcement agencies for on-chain tracking. This series of trends indicates that crypto assets have been fully integrated into the legal system, and investors must utilize mature legal structures for protection.

In this context, the reminder of DAG is not only aimed at XRP investors but also serves as a structural warning for all high-net-worth holders of crypto assets. Regardless of whether investors believe XRP will rise to $100, their tax obligations, asset ownership vesting, and secure custody solutions have already become core issues that cannot be overlooked in family wealth management systems.

FAQ

Does the rise of XRP to 100 dollars require paying higher taxes?

Necessary. The IRS treats cryptocurrency as property, and any sale, exchange, or consumption must calculate capital gains tax. The greater the rise, the higher the tax.

Is it safe to store XRP in a personal cold wallet?

The security is controllable, but the legal risks are extremely high. Once a lawsuit occurs, the court can request the disclosure of wallet assets, and even demand the submission of wallet keys.

Is WY LLC suitable for retail investors?

WY LLC is more suitable for high-net-worth individuals, but retail investors with holdings exceeding six figures can also consider establishing a structure to reduce litigation and tax risks.

Is it dangerous to collateralize and lend XRP?

If you choose a compliant institution and maintain a sufficient collateral ratio, the risk is controllable. Its advantage is that it will not trigger a tax event, making it suitable for long-term holders.

Does Step-Up Basis mean that heirs can be completely tax-free?

Regarding the appreciation of assets, yes. However, if the inheritance exceeds the exemption limit, it may still trigger federal estate tax, and it needs to be used in conjunction with trusts and LLCs.