19 June 2024

Divorce and Cryptocurrency | Kew Law

Cryptocurrency is an unregulated currency, which can pose difficulties when dealing with the matrimonial finances during the divorce process. We outline some of the difficulties involved when it comes to cryptocurrency and divorce, including the need for a digital forensic expert.


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Cryptocurrency vs other types of financial assets

Currencies such as Bitcoin, Ethereum and Tether become difficult to value due to their fluctuating rates. As there are no regulations surrounding crypto assets, they may be easily hidden from a spouse and be difficult to trace. In comparison to the purchase of shares of a private limited company, cryptocurrency often does not link the person to that asset, rather the possession of the digital wallet signifies the currency as their property.

This can also be compared to property in that the registered owner’s name is registered on a central database, whereby the digital wallet is more difficult to trace ownership.

Continuous need for full and frank disclosure

Cryptocurrency is seen as financial property during the divorce process and therefore must be declared in full and frank disclosure.

The volatile nature of cryptocurrency means that this disclosure must be constantly updated throughout divorce proceedings. The currency may also be used illegally for criminal activity such as money laundering or tax evasion, but also to hide funds away from the divorce process. There is a possibility that a digital expert can retrieve the data and link the asset to a person through forensic examination. In comparison to other assets, this will prove a costly and lengthy process. If there is a failure to disclose the crypto assets, the court will consider this when deciding how the matrimonial pot is split.

Division of cryptocurrency in divorce

As crypto assets are not considered to be a currency or money, they may not be subject to certain taxations; however, they may be subject to capital gains tax and a tax specialist should be consulted on their disposal. The court will treat crypto assets in the same way as other assets, in that it may order for the cryptocurrency to be transferred or sold. This is why it is so important that the assets are valued regularly.

The court may also order that the valuation of the cryptocurrency is taken at regular intervals on dates between court hearings. If there are several different crypto assets, the court may also order that each asset is split equally rather than one asset going to one party and the other asset to the other party. This is to ensure that the assets are split fairly due to their change in value. It would also be difficult to offset cryptocurrency against a more stable asset such as a pension.

Why you need cryptocurrency experts during a divorce

Cryptocurrency is a highly volatile asset, which is not regulated like a bank account or pension. The assets must be considered with caution, as the price will fluctuate regularly and may not be used to offset against a more stable asset. This requires a special set of expertise.

A digital forensic expert may also be instructed to look into the crypto assets where disclosure is unclear or not provided at all; and the assets may be transferred or disposed of in settlement of family proceedings.

The court will approach cryptocurrency carefully to ensure that the value of the asset is distributed in such a way that it deems to be fair in the circumstances of each case. Make sure you have the right experts on your side – contact Kew Law Family Lawyers  today.


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If you are currently considering getting divorced and want further information, please do not hesitate to get in touch whereby one of our specialist family lawyers would be happy to meet to discuss your options.

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