Bitcoin and Division of Assets in Divorce


A law firm in the U.K who is currently handling three divorce cases where Bitcoin is a major asset is warning of a “looming divorce nightmare” where family law disputes involve cryptocurrencies.

While cryptocurrency has been around for almost a decade, with the introduction of Bitcoin back in 2009, it is only recently that cryptocurrency has become an issue of concern for separating couples. This sudden introduction of cryptocurrency as a relevant factor in family law disputes has been largely driven by a combination of factors, including increased public awareness of the currency, soaring media interest, and rapidly fluctuating values.

Hiding Cryptocurrency

All three cases going forward in the U.K. involve husbands who either invested in cryptocurrencies, or purchased cryptocurrencies including Bitcoin, Litecoin, Ripple, and Ethereum.

At the center of these disputes is the traceability of such assets during the disclosure process. A lawyer involved in these matters has noted:

Cryptocurrencies have seen some individuals accumulate considerable wealth from a small investment, and the nature of these currencies make it very easy for one party to hide assets.  Unless a spouse discloses an investment in cryptocurrencies, it is entirely possible for them to remain hidden.

The way in which Bitcoin and other cryptocurrencies are traded contribute to the complexity of the issue. The value of cryptocurrencies that are traded online through investment platforms and purchased with money from a bank account can be established. However, where a cryptocurrency is purchased directly and moved offline it is “almost impossible” to follow.

While separating parties have a duty to provide full disclosure of all their assets upon the breakdown of a relationship, it may be easy to hide cryptocurrency assets and limit your ex-spouse’s access to amounts they may be legally entitled to.

How to Divide a Digital Asset?

Above and beyond the ease with cryptocurrency might be hidden, Bitcoin itself points out another added complicating factor: how to split a digital asset? In its standard tongue-in-cheek fashion, Bitcoin points out:

Some assets, like the family dog, can’t easily be split into two, but a bitcoin goes into 100 million parts. What happens to your cryptocurrency when your partner files for divorce?

Rapidly Fluctuating Values

Over the course of several frenzied months, Bitcoin hit a record high of $20,000 USD at the tail end of last year, but just as rapidly fell in value. As of today’s date, the current value of Bitcoin is around $9,900. This immense variation means that investments that may have been small when Bitcoin was just starting out may now be worth significantly more and that multiple valuations of cryptocurrency may have to be carried out as a separation or divorce proceeds towards resolution.

What Will This Mean Going Forward?

It will be interesting to see how the increasing presence of cryptocurrency as an asset will affect family disputes, including divorces and separations. As with anything new and novel, it will undoubtedly take some time for the law to catch up to technology.

We will continue to follow developments here in Canada and in other jurisdictions and will monitor how cryptocurrency is treated in various legal contexts.

In the meantime, if you and your spouse have significant or complex assets, including things such as cryptocurrency, valuation and division of property should not be undertaken without assistance from a knowledgeable family lawyer. Consulting with a lawyer and working with other professionals, including accountants, can ensure that your ex-spouse is truthful and forthcoming regarding financial disclosure.

Jason Howie has worked steadily for over a quarter century to cement his reputation for unparalleled guidance on complicated family law matters, including matters that involve novel and emerging legal questions.  Jason will ensure that the right strategy is used to reach the best outcome given the facts and details of your specific case. To speak with us about complex property division matters, call 519.973.1500 or contact us online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants and other professionals.



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