In recent years, cryptocurrencies such as Bitcoin have become more popular not just among tech enthusiasts, but everyday investors too. However, with that growing popularity comes new complications, especially when it comes to divorce.
If you or your partner own cryptocurrency, it’s important to understand how digital assets like Bitcoin fit into a financial settlement. They can be tricky to find, value, and divide but with the right advice, they don’t need to become a nightmare.
What are cryptocurrencies?
Cryptocurrencies are types of digital money that exists only online. Instead of being held in a traditional bank account, cryptocurrencies are stored in a digital wallet and recorded on a type of public digital ledger. Unlike a bank, there’s no central authority keeping track of what you own. Therefore, this makes it easier to move money around and unfortunately, sometimes hide it too.
Why Do Cryptocurrencies Matter in a Divorce?
When you go through a divorce, both partners are expected to give full details of all their financial assets; this includes everything from properties, businesses, income, savings, including cryptocurrency, pensions and any other valuable assets.
As Cryptocurrencies are digital, they can be stored anonymously, so it can be missed (or even deliberately hidden) during financial disclosure. If one person suspects the other is hiding assets, it might be necessary to involve a forensic expert who understands how to track crypto transactions.
Valuing Cryptocurrencies Can Be Tricky
Cryptocurrencies are known for being very volatile its value can go up or down dramatically in a short time, making it difficult to pin down a fair figure during a divorce. There are some options that clients can agree for example, using an average value over a set period, or having the asset sold and the value split. Others might hold onto to them but adjust the rest of the settlement to account for the risk that it could gain or lose value later on.
How are Cryptocurrencies divided?
Once cryptocurrency has been identified and valued, it becomes part of the overall financial pot to be divided. The court can order one party to transfer a portion of their cryptocurrency to the other. This requires cooperation from the spouse holding the cryptocurrency to use their digital wallet to send it.
Without the correct passwords or access codes (called private keys), the other person may struggle to enforce the order even if the court has ruled in their favour. That’s why clear, practical steps need to be agreed in advance as part of any financial settlement.
What Should You Do If Cryptocurrency Might Be Involved?
If you think cryptocurrency could be part of your divorce, here are a few steps to take:
- Be upfront about any digital assets you own. Full disclosure is key.
- Ask your solicitor about it early on. They’ll know the right questions to ask and may bring in a crypto expert if needed.
- Keep an eye out for warning signs. Things like large cash withdrawals, missing savings, or unfamiliar technology purchases can sometimes point to hidden assets.
- Plan for ups and downs in value. A good agreement will take volatility into account so that things still feel fair later on.
Final Thoughts
Cryptocurrencies may feel new and confusing, but at its heart, it’s just another asset to be considered during divorce. With the right support, it can be managed like any other part of your financial settlement.
If you would like more information or wish to discuss this topic further, please feel free to contact Monika Brar at JPC for a free initial 30-minute consultation.
Email: mbrar@jpclaw.co.uk
Tel: 020 7644 6305
