Dealing with Cryptocurrency During Divorce
Cryptocurrency is becoming far more common in divorce cases, but many people are unsure how it should be handled when a relationship breaks down. If you or your former partner own cryptocurrency such as Bitcoin, Ethereum or NFTs, it is important to understand that these assets are treated in the same way as savings, investments or property during a financial settlement.
In simple terms, crypto assets must be included when both parties exchange financial information as part of the divorce process.
Why does cryptocurrency matter in divorce?
The value of cryptocurrency can sometimes be significant, and because prices can rise and fall quickly, it is important that both people are open and honest about what they own. When couples separate, both sides are required to provide full details of their finances. This includes bank accounts, pensions, property, investments and any cryptocurrency holdings. Even though crypto is digital, it is still considered an asset that may need to be shared as part of the financial settlement.
What information should be provided?
If someone owns cryptocurrency, they should provide clear information about it, including:
- The type of cryptocurrency they own, such as Bitcoin or NFTs
- How much they hold
- Where the cryptocurrency is stored, for example in an online wallet or offline device
- Its current value
- Evidence of ownership, such as screenshots or account statements
- Details of transactions or trading history where possible
Because cryptocurrency values can change rapidly, updated information may need to be provided throughout the divorce process.
What if someone tries to hide cryptocurrency?
One of the biggest concerns in modern divorce cases is that crypto can sometimes be harder to trace than money held in a bank account. However, that does not mean it cannot be discovered. If you believe your former partner owns cryptocurrency that they have not disclosed, this can be raised during the financial negotiations or court process. The court can order further investigations and, in some cases, appoint experts to help trace digital assets.Trying to hide assets during divorce can have serious consequences. The court may impose financial penalties or take a negative view of the person who failed to provide honest information.
How can cryptocurrency be divided?
How crypto assets are dealt with will depend on the individual circumstances of the case. Possible outcomes may include:
- Transferring cryptocurrency from one person to the other
- Selling the cryptocurrency and dividing the proceeds
- Allowing one person to keep the crypto while the other receives a larger share of other assets, such as savings or property
It is also important to remember that selling or transferring cryptocurrency can sometimes create tax issues, so professional advice may be needed.
Getting the right advice
Cryptocurrency can make divorce settlements more complicated, particularly where values fluctuate or there are concerns about hidden assets. Taking advice early can help you understand your position and ensure all assets are properly considered.
The Family Law team at Sydney Mitchell Solicitors can guide you through the process with clear, practical advice tailored to your situation. If you are going through a separation and have concerns about cryptocurrency or other financial assets, contact our team today for support and expert guidance.
