If you don’t personally invest in cryptocurrency, chances are you currently have friends, family, or colleagues who do. Cryptocurrencies have gone from a very niche market to becoming almost entirely conventional, and they have done so in a very short time. Now that they are so ubiquitous, there is a new issue to discuss and that is the question of how cryptocurrencies are handled in the divorce process.
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 available to a lawyer for financial asset disclosure, but when Bitcoin and divorce are combined, something completely new remains.
Handling Bitcoin and divorce is different from handling other financial assets for several reasons. One of them is the great volatility of its value. Bitcoin and other cryptocurrencies are known to experience absolutely wild value changes, both up and down, in value. Therefore, it is necessary to continue tracking and updating the value on the fly, or to establish it at a specific time, when something very different could end up being worthwhile. In any case, it is a less than ideal circumstance for determining and distributing assets or establishing alimony.
Another key issue to understand between cryptocurrency and divorce is that these markets and their transactions were designed to be anonymous and secure. Searching for an individual’s holdings, accounts, or transactions is not the same as looking at a bank account, retirement account, or stock portfolio. The traceability of an individual’s cryptographic accounts will be difficult, at best, and it is still unclear whether or not the courts will place any subpoena power.
Clearly this is just the beginning of Bitcoin issuance and divorce, because all cryptocurrencies are still on the rise. As more people start or continue to use them and become more common and accepted, the way they are managed as financial assets during divorce proceedings will continue to be the focus. The fact that they got up so quickly to begin with has left many people unaware today of how to deal with them in these matters. Note that Bitcoin was launched less than a decade ago.
As always, be sure to consult with an experienced professional in your area. While there is still a lot of uncertainty about how Bitcoin and divorce will be handled and what types of resolutions may await us in the future, a lawyer with experience in divorce will be able to guide you through the process and provide information on areas of financial discovery and all aspects of a pending case.