One of the big financial headlines of recent years has been the rise of ‘cryptocurrency’ such as Bitcoin, Litecoin, Ripple, Dash and Ethereum – to name just a few – but as well as making headlines, these digital currencies are also making headaches for the divorce courts.
The major appeal of these digital currencies for some people is their anonymity and lack of traceability, but that does not make it easy to include them in divorce proceedings as assets, savings or a source of ongoing income.
Guidance in this area is sketchy at best – and many news reports point to an Advice Now survival guide, ‘Sorting out your finances when you get divorced’, written with input from the Family Justice Council.
But that just says you should be honest during divorce about any and all sources of income, which broadly includes cryptocurrency but doesn’t specifically address how to handle Bitcoin in divorce proceedings.
A major question that needs answering is how much one party’s cryptocurrency is worth in terms of the overall divorce calculations, and that depends on how you treat digital money.
If you consider cryptocurrency as an asset, then you might set a fixed value based on its current market price and award a percentage of that to the other party.
Alternatively, you might deem it a source of ongoing income, especially with the rapid rise in value of major cryptocurrencies like Bitcoin in recent years, and then the award might be a percentage of future value, or transfer of ownership of some of the currency.
If you have ownership of a quantity of cryptocurrency – especially if it’s worth a substantial amount – the best thing is to be honest about it, as hiding an asset or source of income during divorce could put you on shaky legal ground later on.
Although there is little legal precedent for divorces involving cryptocurrency awards, there is nothing to stop you reaching a mutually acceptable arrangement regarding the division of assets or income.
That might mean each party takes a portion of the cryptocurrency portfolio, or if only one of you is digitally savvy, it might be better to award a lump sum to the other party by way of recompense.
Whatever works best for you, mediation can help you to negotiate a difficult subject area with no clear legal guidance, so that you can reach an outcome that is satisfactory for all, and keep the dignity in your divorce proceedings.