byElizabeth L. Stewart

How do I divide my Cryptocurrency in a divorce?

As buying and selling cryptocurrency becomes more mainstream, spouses are becoming increasingly interested in the information required when dividing cryptocurrency during separation and divorce.

As a cryptocurrency investor (well…dabbler) myself, the blockchain and its growing popularity intrigues me. Most of my recent files have involved cryptocurrency in their asset portfolio.  Cryptocurrency is not legal tender however is a digital representation of value and used is as a medium to exchange for goods and services between the parties. It generally operates independently of a central bank, central authority or government. Bitcoin is the most popular cryptocurrency however numerous other coins (often referred to as altcoins) exist such as Ethereum, Dogecoin, Polka dot and Ripple.

In both the divorce process and separation for common law partners, all debt and property (jointly or personally owned) must be accounted for and equalized between spouses. Therefore, just as with cash in the bank or property, cryptocurrency is an asset that must be accounted for during settlement negotiations.

Cryptocurrency and how to divide it has its challenges; the following are issues have been raised in my family practice:
1. How do I determine if my spouse has any cryptocurrency?
• Is it easy to hide?
2. How is cryptocurrency valued?
3. How is cryptocurrency transferred and are there tax consequences?

How do I know if my spouse has any?

Determining if your spouse has any cryptocurrency during divorce is important because spouses can be hide it quite easily.

Cryptocurrency operates outside of our central banking system and therefore there are no formal bank statements or documents to prove it exists, thus making it easier for your spouse to hide. If your spouse has mentioned investing crypto and/or an interest in buying it the odds are they own some.

Because it is typically purchased with cash, the transactions should show up and be traceable in your spouse’s bank statements. Be aware that additional assets purchased with cryptocurrency such as non-fungible tokens (“NFTs”) are divisible assets as well and be quite valuable. As a spouse, you and your lawyer will need to review all bank records carefully to find proof of purchase etc.

How is cryptocurrency valued?

The value of cryptocurrency is highly volatile making its valuation challenging during the divorce process. It is not uncommon for significant swings in value to occur in short periods of time.

This can be solved by choosing a specific valuation date and/or divvying up the other assets to account for any significant value swings.

How is it transferred?

Transferring cryptocurrency can be completed through each parties’ digital wallet. Cryptocurrency transfers occur through apps or directly through a cryptocurrency exchange. There may be transfer fees to be aware of depending on which digital wallet, app and/or exchange you transfer through and such fees need to be considered in negotiations.

Tax consequences?

Taxes are another aspect worth considering during divorce negotiations because cryptocurrency can be subject to tax in certain situations.

Please contact me at should you wish to book a consultation or have any further questions about your cryptocurrency when separating.

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