Cryptocurrency

What is cryptocurrency?

Cryptocurrency is a type of digital or virtual currency that uses cryptography for security and operates independently of a central bank. Unlike traditional money, it exists only online and is stored in digital wallets. Popular examples include Bitcoin, Ethereum, and Ripple.

Cryptocurrencies can be traded on online platforms (called exchanges) and may increase or decrease significantly in value. 

Is cryptocurrency considered a marital asset in divorce proceedings? 

Yes. Under English family law, cryptocurrency is treated as a form of property. Whether held in one party’s name or both, it can be considered part of the marital pot and is subject to division like any other asset.

Can a spouse hide cryptocurrency during divorce proceedings?

Technically, yes, but as with any other assets if undisclosed it would be considered contempt of Court. Whilst digital currencies can be more difficult to trace, parties are under a legal duty to provide full and frank financial disclosure. Attempting to conceal cryptocurrency can lead to serious consequences, including adverse inferences, costs orders, or a re-opening of the financial settlement in the event they are discover following conclusion of  proceedings.

How is the value of cryptocurrency assessed for divorce?

Cryptocurrency is valued at the date of the hearing or agreement, not at the date of separation. Due to its volatility, up-to-date expert valuation is often necessary. 

What happens if my spouse refuses to disclose their cryptocurrency holdings?

If you suspect undisclosed digital assets, your solicitor can apply for a court order for disclosure, instruct forensic accountants, or request disclosure from exchanges. Hiding assets is a serious breach of legal duty and can result in penalties including being fined, made to do unpaid work or even imprisonment.

Can cryptocurrency be traced in family law proceedings?

Yes. While crypto transactions are pseudonymous, they are recorded on a public ledger (the blockchain). With the help of digital forensic experts, wallet activity and transfers can often be identified and traced, especially if linked to known exchanges.

Do I need to disclose my cryptocurrency if it was acquired before the marriage?

Yes, assets acquired before marriage can be considered non-matrimonial, but they must still be disclosed. The court may decide to include or exclude these assets from division depending on factors such as the length of the marriage, needs of both parties, and whether the asset was intermingled.

Can I receive cryptocurrency as part of my divorce settlement?

Yes. Cryptocurrency can be transferred or offset as part of a financial settlement, either by direct transfer of tokens or by receiving an equivalent value in other assets. Parties should consider volatility, tax implications, and access to wallets when accepting crypto as part of a settlement.

Should I get expert advice about crypto in my divorce?

Absolutely. Cryptocurrency is complex and constantly evolving. Working with a solicitor experienced in crypto and, where needed, financial or forensic experts ensures full asset disclosure, accurate valuation, and fair division.

Glossary: Key Cryptocurrency Terms 

Cryptocurrency

A form of digital money that exists only online. It’s decentralised, meaning it’s not controlled by a government or bank. Examples include Bitcoin, Ethereum, and Litecoin.

Blockchain

A secure, digital record of all cryptocurrency transactions. Think of it like a public ledger or spreadsheet that everyone can see but no one can change. It helps verify ownership and trace past transactions.

Wallet

A digital tool used to store cryptocurrencies. Wallets can be:

• Hot wallets (online and connected to the internet), or
• Cold wallets (offline, such as USB devices or hardware wallets).

Each wallet has a public address (like an account number) and a private key (like a password).

Private Key

A secret code that gives access to a cryptocurrency wallet. Anyone with the private key can control the funds in that wallet. It must be kept secure and is not recoverable if lost.

Exchange

An online platform where users can buy, sell, or trade cryptocurrencies. These platforms often require identity verification and may hold records useful in divorce proceedings.

Token

A unit of cryptocurrency. For example, you might own 0.5 Bitcoin or 10 Ethereum tokens. Tokens can be worth anything from a few pennies to thousands of pounds.

Volatility

Cryptocurrency prices can rise or fall very quickly. This unpredictability is called volatility, and it can affect how crypto is valued during divorce settlements.

Mining

A technical process where computers solve complex problems to validate transactions on the blockchain. In return, they earn cryptocurrency. It’s not typically relevant in divorce, but may be if one party earns crypto this way.