How Owning Cryptocurrency Can Impact Your Divorce

Cryptocurrency, a digital form of currency, has gained significant popularity over the years. With an estimated 20 million Americans owning cryptocurrency, it is crucial to understand how these assets can impact divorce proceedings. In this blog, we will delve into the potential impact of owning cryptocurrency on divorce settlements and what steps you can take to protect yourself.

What is Cryptocurrency?

Cryptocurrency is a decentralized digital asset that uses blockchain technology for secure financial transactions. It operates independently of central banks and is widely popular due to its potential for high returns. 

Cryptocurrencies like Bitcoin, Ethereum, and others operate on decentralized networks using blockchain technology. They offer a level of anonymity and security that traditional financial systems may not provide. However, this anonymity can complicate divorce cases, especially when tracking and dividing assets are concerned.

Cryptocurrency is Considered an Asset

During a divorce, all assets, including cryptocurrency, are subject to division. The unique nature of cryptocurrency makes it challenging to determine its value and divide it fairly. Unlike conventional assets, cryptocurrencies are not held in banks or brokerage accounts. Instead, they reside in digital wallets, accessible only through private keys or passwords.

This anonymity of ownership can make tracking and verifying the existence and quantity of these assets difficult. There might be instances where spouses attempt to hide or undervalue their cryptocurrency holdings. As a result, it becomes crucial for the other party to be vigilant and proactive in uncovering any hidden assets.

The Impact on Divorce Settlements

To ensure a fair division of cryptocurrency during a divorce, gathering as much information as possible is essential. This involves obtaining records of cryptocurrency transactions, such as exchanges or purchases, and verifying the existence of digital wallets. In some cases, it may be necessary to involve experts who specialize in cryptocurrency valuation to accurately assess the value of these assets.

Cryptocurrency can also complicate issues such as property division, spousal maintenance, and child support. Assets acquired during a marriage are subject to division in many jurisdictions. However, determining the value of cryptocurrency can be challenging due to its volatility. The value of cryptocurrencies can fluctuate drastically during a short period, making it crucial to establish a valuation date and consider the potential for future growth or decline.

In terms of spousal maintenance and child support, cryptocurrency holdings can impact the determination of income and financial resources. If one spouse receives income from cryptocurrency investments or mining, it must be disclosed and considered when calculating support obligations. Failure to disclose cryptocurrency holdings can have serious legal consequences.

Steps to Protect Yourself

If you or your spouse own cryptocurrency, it is essential to take steps to protect yourself during a divorce. These may include:

• Keeping records of all cryptocurrency transactions and holdings
• Hiring experts to assist with the valuation and tracking of digital assets
• Disclosing all crypto holdings during the divorce process
• Considering a premarital or postmarital agreement that addresses the division of cryptocurrency in case of divorce
• Seeking the help of an experienced attorney who understands the complexities of cryptocurrency and its impact on divorce proceedings

Contact Us for Guidance

Owning cryptocurrency can significantly impact divorce proceedings, from property division to spousal maintenance and child support determinations. It is crucial for both parties to be transparent about their crypto holdings during a divorce and take steps to ensure a fair division of assets. If you are going through a divorce and own cryptocurrency, it is best to seek the guidance of an attorney who can help protect your interests. WARD FAMILY LAW, LLC has extensive experience in handling complex divorce cases involving cryptocurrency and can provide you with the necessary guidance and representation. Contact us today for a consultation.