- Bitcoin and divorce: is cryptocurrency a marital asset?
Bitcoin and divorce: is cryptocurrency a marital asset?
Bitcoin and divorce: is cryptocurrency a marital asset?21st January 2021 - Published by Kuits Family team
Bitcoin has hit the headlines again recently with its value hitting record highs, almost on a weekly basis only to be followed by a significant, although not on this occasion catastrophic, crash.
As highlighted in our recent article by Tax Partner, Paul Bricknell; volatility can have a significant effect on tax arrangements and planning. However, it can also potentially play havoc in divorce. Here, Family Lawyer Colin Davies discusses how cryptocurrency is a marital asset during divorce and the practical problems than can occur.
The investment and trading of cryptocurrency such as Bitcoin has become more popular and accordingly is becoming a feature more often in divorce. We are often asked whether Bitcoin or other cryptocurrencies form part of the marital assets – the answer to that is yes. It is an investment like any other to be taken into account and the ownership of which must be disclosed. However, a couple of issues arise.
One of the selling points that cryptocurrencies offer to some is the enhanced levels of security and anonymity available. Transactions can be made almost instantaneously and be hard to track. There are many ways their existence can be hidden from view.
Whilst there are steps that can be taken to trace and freeze those assets where necessary, these steps can be time consuming and expensive, making cryptocurrency attractive for less scrupulous individuals, if they’re going through a divorce or not.
The other issue is the extreme volatility mentioned above and how that volatility can be factored into settlement discussions. For example, should cryptocurrency be held by the spouse to whom they belong so that he/she takes all the benefit of potentially significant gains? Should they be offset against less volatile assets to provide a degree of stability for the non-owning spouse, leaving the owning spouse with all of the risk? At what point should they be valued? What happens if immediately after a settlement is reached, there is a massive increase or drop in value? Can anything be done to redress the intended balance? These are all valid questions to which proper and informed thought and legal expertise need to be given.
Get in touch with a Family Solicitor in Manchester
If you are concerned about cryptocurrencies, or indeed any assets within divorce arrangements, contact Kuits Senior Lawyer Colin Davies on 0161 838 8180, or email email@example.com to get expert advice.