Hardware wallet lost: how to rescue your coins and what the tax office accepts

If your hardware wallet is gone, your coins are almost never gone. Your holdings are still on the blockchain, exactly where they always were. The device never stored them; it only kept the keys you use to dispose of them. That is why a single question decides everything: do you still have your recovery phrase? If the answer is yes, the rest is routine and done in half an hour. If it is no, the second and more uncomfortable question arises, and this article is mainly about that one: can you at least write the loss off against tax? The short answer for investors in Germany, under current administrative practice, is no. A lost key is not a sale, and without a sale German income tax law recognises no deductible loss on crypto-assets held privately. There are counter-arguments, they deserve to be taken seriously, and they appear further down. Do not rely on them. This article takes you through both halves of the problem: first the technical rescue, then the tax position along with the evidence you need for it. Hardware wallet lost: why the device is not your coins A hardware wallet is a small device that generates and stores your private keys offline and signs transactions without ever ...