Historically, the biggest financial dispute during divorce proceedings has been who keeps the house. Now, alongside all other traditional assets, digital currencies are becoming the subject of financial disputes.
Digital currencies or cryptocurrencies include Bitcoin and Ethereum, which are the best-known crypto vehicles. However, new cryptocurrencies are entering the market every day so the list is potentially endless. In addition to cryptocurrencies, there are other digital assets like non-fungible tokens (NFTs), which are essentially pieces of digital art.
With the wide availability and growing popularity of digital assets, they’re quickly becoming a battleground in divorce settlements. In this short blog, we’re going to look at the law surrounding cryptocurrency, divorce and where you stand if you or your ex-partner hold digital assets.
Digital assets and technology in financial settlements
Just like bank accounts and stocks, digital assets are treated as property and legally have to be disclosed and valued during a divorce. If you or your spouse have cryptocurrency investments or other digital assets, you’ll need to tell the Court, and they will be counted in the pot of marital assets.
Digital assets can introduce new complexities. Cryptocurrencies, in particular, are notoriously volatile, with values often experiencing significant fluctuations in very short periods, sometimes within days or even hours. This volatility poses challenges for the accurate valuation and fair division of assets, making it difficult for legal professionals and courts to establish a stable and reliable assessment of their worth at any given point.
Tracing cryptocurrency holdings can be challenging due to their decentralised nature, potential anonymity, and limited regulatory oversight.
But does that mean they’re impossible to trace?
Are digital assets traceable by the court?
While you might think cryptocurrency offers an easy way to stash away wealth unnoticed, UK courts and forensic accountants are catching on fast. If there‘s evidence or even a suspicion that one party holds cryptocurrency, the Court can order them to provide details and even dig into bank records for tell tale signs like transfers to a crypto exchange. The bottom line is that tech has not created a Wild West where normal rules do not apply. Transparency and honesty about assets are still required, whether they’re digital or not.
Final thoughts
Technology is reshaping how we earn, invest, and store wealth. It’s only natural that it also shapes how we divide it after legal processes like divorce. Digital assets may be new, but the principles behind financial disclosure remain the same. Whether your portfolio includes property, pensions, cryptocurrency or pixelated art, honesty and transparency are key. The courts are adapting, experts are evolving, and digital assets are treated no differently from any other part of the marital estate.
Need legal advice about a financial settlement involving digital assets?
If you have concerns about how cryptocurrency and digital assets may impact your divorce or financial settlement, Gorvins’ expert team of family lawyers are ready to support you. Contact us today by calling us on 0161 930 5151, emailing us at enquiries@gorvins.com or filling in the online form.