Cryptocurrency and Divorce: Untangling Digital Assets

In this blog, we help you understand the many challenges of dividing cryptocurrencies in divorce proceedings. We also discuss how cryptocurrencies are treated as assets, their hidden nature, price volatility, and the importance of accurate valuation.

Cryptocurrencies like Bitcoin, Ethereum, and Tether have revolutionised finance, but they bring unique challenges when it comes to divorce. This article explores the treatment of digital assets in divorce proceedings, including their recognition as assets, the difficulties in tracking and valuing them, and the importance of expert assistance. Thomas Flavell & Sons' Family Team offers expert advice to ensure accurate valuation and a fair financial settlement.

In the Family Courts of England and Wales, cryptocurrencies are recognised as an asset and therefore subject to the same principles that govern the division of assets.

Unlike banks and building societies, cryptocurrencies are unregulated making them difficult to track and value accurately. They are a digital medium of exchange which operate using blockchain technology which is essentially a database ledger system to authenticate digital transactions.

As the name suggests “crypto” means hidden or concealed and as such, cryptocurrencies can be easily hidden or transferred, making it challenging to identify their existence if the holder does not openly disclose them.

In contrast to traditional investments, crypto currencies are notorious for their price volatility, with values often fluctuating dramatically. This instability poses difficulties when attempting to assign an appropriate value to the digital asset within financial negotiations. It is therefore vital that any valuation is up to date at the point when a settlement is negotiated or considered by the Court.

During financial negotiations, as with any other assets, both parties should provide full and frank financial disclosure which should include evidence of any cryptocurrency. Any information will need to be carefully scrutinised for evidence of crypto assets, particularly if one partner believes the other to hold crypto assets which have not been disclosed.

Valuing cryptocurrencies accurately is essential and engaging other experts such as forensic accountants and/or cryptocurrency specialists are required to assist with determining the value of the digital asset.

It is important that you obtain early advice to ensure that you achieve the best outcome. The Family Team at Thomas Flavell & Sons are experienced and can offer advice to help ensure that digital assets are not overlooked and are valued accurately during the negotiation of a financial settlement.

Please contact a member of our Family Team at either of our Warwickshire (01926 887700) or Leicestershire (01455 610747) offices for a consultation.