If you don’t personally invest in cryptocurrency, you probably have friends, family or colleagues who do. Cryptocurrencies have gone from being a niche market to becoming almost mainstream, and they have done so in a very short time. Now that they are so ubiquitous, there is a new question to grapple with, and that is how cryptocurrencies are handled in divorce proceedings.
The determination and distribution of financial assets, as well as the determination of alimony payments, are central issues to be resolved during most divorce proceedings. There are many tools at a lawyer’s disposal for financial asset disclosure, however when you combine Bitcoin and divorce, you are left with something entirely new.
Managing Bitcoin and divorce is different from managing other financial assets for several important reasons. One is the sheer volatility of its value. Bitcoin and other cryptocurrencies have been known to experience absolutely wild swings, both up and down, in value. Therefore, the value must continue to be tracked and updated on the fly, or be set at a particular time, when it could end up being worth something very different in the future. In either case, it is a less than ideal circumstance for determining and distributing assets or establishing alimony.
Another key issue to understand between cryptocurrencies and divorce is that these markets and their transactions were designed to be anonymous and secure. Searching an individual’s holdings, accounts, or transactions is not the same as searching a bank account, retirement account, or stock portfolio. Tracing an individual’s crypto accounts will be difficult at best, and whether or not courts grant any subpoena power behind that is unclear at this time.
Clearly, this is just the beginning of the Bitcoin and divorce issue, because 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 handled as financial assets during divorce proceedings will continue to take center stage. It is the fact that they were promoted so quickly in the beginning that has left many people off guard today about how to deal with 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 local area. While there is still a lot of uncertainty about how bitcoin and divorce will be dealt with, and what types of rulings can await us in the future, an experienced divorce attorney will be able to guide you through the process and offer insight into financial discovery areas and all aspects of a pending case.