If you don’t personally invest in cryptocurrency, then it’s likely that you have friends, family members or colleagues who do at this point. Cryptocurrencies rose from a niche market to almost completely mainstream, and they did so in a very short time. Now that they are so ubiquitous, there is a new issue to contend with, and that is the question of how to handle cryptocurrencies in the divorce process.
The determination and distribution of financial assets, as well as the determination of alimony payments, are central issues that must be resolved during most divorce proceedings. There are many tools available to a lawyer to disclose financial assets, but when you combine Bitcoin and divorce, you’re left with something entirely new.
Handling Bitcoin and divorce is different than handling other financial assets for several huge reasons. One is the sheer volatility of their value. Bitcoin and other cryptocurrencies have been known to experience absolutely wild swings, both up and down, in value. Therefore, the value must either continue to be tracked and updated on the fly, or be set at a specific point in time when it may turn out to be worth something much different in the future. In either case, this is a less than ideal circumstance for determining and distributing assets or determining alimony.
Another key issue to understand between cryptocurrency and divorce is that these markets and their transactions are designed to be both anonymous and secure. Searching an individual’s holdings, accounts or transactions is not the same as looking into a bank account, retirement account or stock portfolio. Tracing an individual’s crypto accounts will be difficult at best, and whether the courts will put any subpoena behind it remains unclear at this time.
Apparently, this is only the beginning of the Bitcoin and divorce problem, as all cryptocurrencies are still on the rise. As more people start or continue to use them and they become more common and accepted, how they are treated as financial assets during divorce proceedings will continue to be in the spotlight. The fact that they rose so quickly in the beginning has left many people unprepared today as to how to treat them in such matters. Keep in mind that Bitcoin was launched less than a decade ago.
As always, be sure to consult with an experienced professional in your area. While there is still a lot of uncertainty about how Bitcoin and divorce will be treated and what types of decisions may await us in the future, an experienced divorce attorney will be able to guide you through the process and offer insight into the areas of financial discovery and all aspects pending case.