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Dealing with cryptocurrency in a divorce settlement
When a couple divorces, the law directs a fair division of assets between the parties. To ensure this, the first step is to ascertain the asset pool – which includes all the assets and liabilities of both partners, including their crypto holdings.
Once all assets and liabilities related to the settlement have been declared and added to the matrimonial pool, it’s a question of fair division. This could be based on mutual agreement between the parties, such as reaching a settlement out of court with the help of solicitors. In case an amicable settlement cannot be reached, the two parties could approach the court, and a judge can then decide how the property pool will be split. As cryptocurrencies are part of this pool, they are subject to the rules of the split as well.
The challenge when dealing with cryptocurrency in a divorce settlement
A common challenge that can arise when dealing with crypto in divorce settlements is withholding of information or incomplete disclosure by a party.
Since cryptocurrencies are decentralised, they are - to a certain degree - untraceable. There isn't one entity that can be subpoenaed to provide data into a person's crypto assets. Also, since there are crypto exchanges and wallets located across the globe, it is very difficult to know if a person is holding cryptocurrencies in one of these international accounts. Since cryptocurrencies are difficult to trace, people sometimes withhold their crypto holdings when disclosing their assets in property settlements.
Another issue when dealing with cryptocurrencies in a divorce settlement is price volatility. Crypto prices are known to fluctuate wildly and in short periods of time. If the price of a cryptocurrency falls or rises dramatically after the court has ruled on how the assets should be split, one party could end up profiting or losing huge amounts of money.
How one can deal with such issues during separation is unclear. There is a lack of precedent, and the law is yet to provide clear direction on how to deal with cryptocurrencies in divorce and property settlements. However, if you’re party to a divorce or property settlement proceeding, it is your duty to abide by the law and frankly disclose information about the assets you own, including cryptocurrencies. The law states that every party must provide full and frank disclosure when it comes to property, and not doing so could result in penalties against you.
Should you feel your partner owns cryptocurrencies but has not declared them, you could approach the court through lawyers to get him or her to disclose these assets. There are ways to track crypto transactions by tracing a person’s phone or computer, but these are extreme measures, and a court might not always rule in your direction. If you have any apprehensions about your partner not disclosing their assets, speaking to a legal professional could be helpful.
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