CRYPTOCURRENCY AND DIVORCE – WHAT ARE THE KEY ISSUES
Our divorce lawyers answer some key questions in this emerging area.
Cryptocurrency is now a major area where individuals are putting money away. Many exchanges do not carry out any due diligence and they can be hard to trace. Here are some key questions and answers:
What is cryptocurrency?
Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions.
Cryptocurrencies don’t have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units.
How is cryptocurrency different to other matters in a divorce?
- It has no physical form and exists only in the network.
- Transactions and accounts are anonymous and are not generally connected to any real-world entities, so it is more difficult to track than money held in bank accounts.
- It is completely decentralised with little or no regulation
How will cryptocurrency be considered on divorce?
Both parties are required to disclose their respective financial circumstances to the other to assist with the discussions about how the matrimonial assets should be divided to achieve fairness.
This might seem straight forward in principle, but there are several unique challenges when dealing with cryptocurrency.
What are some of the challenges of dealing with cryptocurrency on divorce?
DISCLOSURE OF ASSETS – HOW DO YOU TRACE IT
Due to the anonymous nature of cryptocurrency, separating couples could exploit this added layer of privacy to try and hide assets. It is possible to instruct tracing agents to locate digital wallets (where individuals hold cryptocurrency) if basic details are available, but this service will involve additional cost so a decision to instruct needs to be carefully considered.
HOW CAN YOU SECURE ASSETS?
The courts have the power to issue an emergency freezing injunction to secure assets if they are at risk, and this would equally apply to securing cryptocurrency. However, the effectiveness of this type of order against cryptocurrency will be limited because there is no centralised body or regulator to administer it, unless the assets are being held on an exchange.
HOW DO YOU VALUE IT
It is not unusual for assets such as properties or shares to be re-valued during the course of negotiations, however, the cryptocurrency economy is extremely volatile making it particularly challenging to value cryptocurrencies at any one time as the price can fluctuate wildly.
For more information on any aspect of divorce, contact Bond Adams solicitors at [email protected] or 0116 285 8080.
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My name is Louise and I am the Digital Marketing and Administrative Assistant at MyBump2Baby. I have been writing in the parenting niche for over 2 years specialising in fertility, pregnancy, baby and baby name support articles.