Navigating Divorce with Digital Wealth

During a divorce, couples must look beyond traditional property like homes, vehicles, and savings accounts. With the rise of digital currencies like Bitcoin and Ethereum, digital assets have become a growing consideration in family property division.

Understanding how these assets are defined, valued, and handled can help ensure a fair and informed resolution.

Understanding Bitcoin in a Family Law Context

Bitcoin is a type of digital currency that allows people to send and receive funds without going through a bank or financial institution. All transactions are recorded on a public ledger known as the blockchain, which keeps a transparent and secure history of every movement of the asset.

Why Crypto Matters in Divorce

Unlike traditional investments, crypto can be acquired in several unconventional ways, each with its own legal implications:

• Mining (Proof-of-Work): This involves using computer systems to earn cryptocurrency by validating transactions. Legal considerations include identifying income value, expenses related to mining, and ownership of mining equipment.

• Staking: Crypto holders can earn rewards by locking up tokens in a network. These assets may be inaccessible for a period, complicating liquidity and division.

• Yield Farming: In the decentralized finance (DeFi) world, crypto can be lent or pooled to generate returns. The earnings can vary significantly, making valuation difficult during a separation.

  
  

Each acquisition method raises questions around ownership, liquidity, and how the asset should be treated under provincial law.

Valuing Crypto in a Volatile Market

Because cryptocurrency values can shift quickly, accurate and defensible valuations are key in family law cases. Courts often require asset values as of a specific date. With crypto, even a day's difference can significantly change the value.

It's important to rely on reputable exchanges or valuation services when determining value. In complex cases, professional valuation experts with experience in crypto can offer clarity and improve fairness.

Who Holds the Crypto

How crypto is stored and accessed plays a major role in legal proceedings. In custodial holdings, they are held on centralized platforms like Coinbase or Binance. They are easier to document but come with third-party risks.On non-custodial platforms Crypto can be stored in personal hardware or software wallets. If one party has exclusive access, locating and valuing the assets can be challenging, especially without private key access.

Handling Crypto During Divorce Proceedings

Given its complexity, crypto requires a careful legal approach. One of the most important steps is obtaining an expert valuation. Professionals who understand the nuances of cryptocurrency can provide accurate and credible assessments that hold up in court.

Equally important is maintaining transparency. Keeping detailed records of how and when digital assets were acquired, where they are stored, and their transaction history helps build a clear financial picture.

Property Division with Bitcoin in Family Law

If there is reason to believe your ex owns cryptocurrency, your lawyer can ask them under oath whether they have ever bought or held digital assets like Bitcoin. If they have, your legal team can take steps to review their online wallet and trace any transactions.

By comparing bank records with blockchain activity, your lawyer can help piece together a clear picture of what exists, making sure no assets are hidden, and everything is fairly accounted for in the property division.

If you or your spouse hold digital assets, our team can help you understand your rights and ensure everything is accounted for in your separation or divorce.

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