Do you or your spouse have money in cryptocurrency, such as Bitcoin or Ethereum?
The use of cryptocurrency is becoming increasingly prevalent, and in 2021, the courts confirmed that money held in a crypto wallet is “property”; therefore, it will be subject to the division of assets.
Hiding the invisible?
In financial remedy proceedings, you and your spouse will complete a document (Form E) which discloses all your assets and liabilities. It should be accompanied by evidence, including 12 months of bank statements for each account held.
The parties will then exchange these forms, highlighting their respective financial positions. This will assist in negotiating a financial settlement. As “property”, any cryptocurrency holdings must be declared accompanied by evidence of the account.
Suppose you suspect that your spouse has deliberately failed to disclose their digital assets. There are steps that you can take to identify these assets.
When you receive bank statements from your spouse during financial disclosure, you should carefully analyse the statements to see if you can identify phrases relating to the use of digital assets. This may be as simple as locating a transaction to ‘Coinbase’ or using the word ‘finance’, which may indicate engagement with a trading platform. When discussing a financial remedy with your solicitor, tell them if you suspect your partner may hold any digital assets.
Valuing… a movable feast
The risk with cryptocurrency is that the value can constantly fluctuate.
It can be challenging to place a figure on the balance of the currency within the Form E, as this balance can change by the second. This can be avoided by converting crypto into real money. However, this can have tax implications, which may make an individual reluctant to do so.
It is essential to carefully consider cryptocurrency within a financial settlement. This asset can be risky – digital assets are more susceptible to loss or theft.
If you are negotiating a financial settlement and agree to take the cryptocurrency at a particular value, be aware that its value may have plummeted before your settlement is concluded. An up-to-date valuation should be sought before negotiating any final settlement.
Alternatively…
If holding any cryptocurrency doesn’t interest you, an alternative may be to seek a larger slice of the equity from the family home or a lump sum.
For more information about this article or any other aspect of family law and divorce, contact your Napthens Solicitors in Preston, Fylde Coast, Southport, and North West today.
