Cryptocurrency in matrimonial proceedings

With a rise in people investing in cryptocurrency, the existence and potential distribution of these digital assets is becoming an increasingly normal issue for those going through a divorce or dissolution.

The first step towards agreeing on a fair distribution of assets is to establish what is available to both parties, whether in sole or joint names. This information-gathering exercise is usually followed regardless of whether the parties are attending an alternative method of dispute resolution (such as mediation or arbitration) or court. Cryptocurrency should be included within the disclosure process; it is no exception to the rule.

A common concern is that the paperless nature of cryptocurrency makes it easier to conceal than other assets and there is a real risk that it may remain hidden. However, there can be sanctions for parties who try to hide assets, which may act as a deterrent. Also, they can sometimes be traced through bank statements showing the purchase of the currency, or with the help of a forensic accountant, for example. Where there are unexplained transactions, the court even has the authority to assume that there must be other assets and therefore award less to the party accused of trying to conceal them.

Another issue is that the value of cryptocurrency can fluctuate much more than other tangible assets, such as property or savings. It will therefore need updating as the case progresses to avoid a settlement being agreed that is based on an outdated valuation figure.

In summary, cryptocurrency should be disclosed and can be regarded as part of the “marital pot” for division, whether by transferring some or all of the asset to the other party, or off-setting i.e. offering the other party more from the other assets in lieu.

Our team of family lawyers are experienced in resolving financial matters, including those involving cryptocurrency. We are also members of Resolution, an organisation which promotes a non-confrontational approach to family cases.  If you are seeking advice in this area, please do get in touch with Emily Bull on 01730 268211. Your call will be completely confidential.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.