Talk to anyone who’s gone through divorce and they’d likely say the experience was no walk in the park. If you’re facing a divorce in 2022, there’s a new asset that needs to be accounted for – Cryptocurrencies. Here’s what you need to know.
In the last few years, the cryptocurrency market has exploded. It’s hard to go a day without hearing about it in the news. But what does that mean for your divorce?
Well, if you’re dealing with a crypto-rich spouse, it can mean some serious headaches. Crypto assets are notoriously difficult to trace and control—and it doesn’t help that there are still plenty of legal gray areas when it comes to cryptocurrencies themselves. That means they’re not always easy to deal with in court cases like divorce proceedings.
When it comes to discovering hidden assets such as cryptocurrencies, Masters Law Group has your back. Here’s everything you need to know about crypto assets in divorce cases so you can make sure you’re getting what’s fair.
Cryptocurrency is a form of digital currency that uses the technology of cryptography to secure its transactions. It is designed to be used as a medium of exchange, like money, but it can also be used to transfer data securely.
One of the early appeals of cryptocurrency was that it provided the opportunity to transfer large amounts of wealth anonymously without any government or institutional interference. These days, cryptocurrency is used by some owners to take care of routine matters such as paying bills, buying goods, and others use it as collateral to obtain loans. Many others are purchasing it as a form of investment.
The most popular form of cryptocurrency is Bitcoin. Some examples of other digital currencies include Litecoin, Ethereum, Ripple, Zcash, Bitcoin Cash, Cardano, among others.
Why is Cryptocurrency Relevant Upon Divorce?
Cryptocurrency is an asset to be considered in the financial settlement. The reality is that it is not a feature of mainstream divorce yet. This is because a large proportion of the general public still views cryptocurrency as too much of a gamble and the difficulty of identifying whether or not someone holds cryptocurrency.
However, with the current growth in popularity we can expect to see more cases involving cryptocurrencies as assets for divorce settlements. Cryptocurrency is increasingly being used as an alternative form of payment and investment, so it’s important to understand how it could be treated in your divorce case.
Looking For Cryptocurrency Assets
If you suspect that your spouse/civil partner is hiding cryptocurrency from you, there are steps you can take to investigate the matter.
First, make sure that both parties provide full and frank disclosure. This means that both parties should disclose all of their assets, including cryptocurrency. If one party suspects that the other isn’t disclosing cryptocurrency in the course of their divorce proceedings, then preliminary investigative works need to begin.
The standard disclosure process requires each party to disclose bank statements. These should be carefully examined to see if there are any transactions or proof of purchase of cryptocurrency i.e. exchanges or trading platforms. If the bank statements aren’t showing anything, then you can request your spouse’s credit card statements. You also can make a specific request for disclosure of all apps on their spouse’s smartphone.
Agreements on Dividing Crypto Assets
The rise of cryptocurrency has created a whole new world for the courts. With its fluctuating value, crypto assets can represent substantial sums of money that are not always easy to track down. This can lead to court cases where one spouse is accused of hiding assets from their spouse, or where an unscrupulous party will try to use the anonymity of crypto assets to hide their own assets.
When a couple gets divorced, it can be difficult to determine how to divide the assets. In the case of cryptocurrency, however, the process is fairly straightforward.
- Simple Division: You receive a share of the cryptocurrency in its current form.
- Custodial Holding: If you decide to not set up a cryptocurrency account, you can find the custodial approach suitable. A third-party custodian can transact in cryptocurrency, receive your share and hold it until the divorce is final.
- Cryptocurrency Owner Liquidation: The former spouse who owns the asset will convert the other party’s share to cash. The digital currency’s value on the day of sale determines how much money you receive.
- Liquidation With No Claim Upon Remaining Cryptocurrency: This approach starts the same as #3. However, both parties have agreed in advance that the original owner of the cryptocurrency now has full title to the remaining asset and does not owe the former spouse any remaining crypto.
Regardless of whether you decide to keep your cryptocurrency or sell it off, it’s important to remember that there is no loophole when it comes to divorce proceedings. The courts are used to the volatility and fluctuating value of shares and other types of assets—cryptocurrency is a whole new phenomenon.
If you’re having doubts and suspect that your spouse is hiding crypto and don’t know what signs to look out for, you can find that information here. If you have questions about the different types of crypto and are trying to get acquainted with the market, you can find that information here.
Masters Law Group – Cryptocurrency and Divorce Lawyers
When you are facing the divorce process in Illinois and are dealing with cryptocurrency asset division, do not hesitate to call the attorneys at Masters Law Group.
Our team of attorneys are highly experienced in dealing with Cryptocurrencies in divorce and are here to answer your questions about divorce and digital asset division.