Beneficial ownership refers to the true ownership of an asset, including cryptocurrencies, where the legal title may differ from who actually controls or benefits from it. In many cases, the person listed on a wallet or exchange may not be the individual who gains from the asset’s value or transactions.

This concept is particularly significant for regulatory compliance, anti-money laundering (AML), and combating the financing of terrorism (CFT). Authorities aim to identify beneficial owners to ensure transparency and accountability.

In practice, this means individuals or entities that have control over cryptocurrency—whether through holding private keys or controlling a wallet—are considered the beneficial owners, even if they are not the official account holders.

This can complicate matters in legal disputes or tax issues, as distinguishing between legal and beneficial owners is essential for proper asset management and compliance. Understanding beneficial ownership helps in maintaining the integrity of the financial system and ensures that those who benefit from cryptocurrency transactions can be held accountable.