There is no doubt that over the last few years cryptocurrency has surged in popularity with brands such as Bitcoin becoming a household name. As these digital assets continue to become more prevalent in everyday life, they have also made their way into the family law sphere. Given the nature of such assets, it can pose particular difficulties in property disputes.
Identifying the existence and extent of cryptocurrency holdings is often the first issue. Whilst parties have an obligation to provide ‘full and frank’ financial disclosure about all assets, undisclosed cryptocurrency can be difficult to identify. Unlike traditional bank accounts, cryptocurrencies can be stored in “digital wallets”, registered to a number, rather than a person’s name. They are also often lacking formal regulations and oversight, although this is still a developing area.
Another significant challenge is determining the value of cryptocurrencies for the purpose of property division. Whilst a current value may be relatively easy to determine if you know how much cryptocurrency you or your partner are currently holding, cryptocurrency is known for its volatility, often with sharp increases or decreases in its value over relatively short periods of time. There is also the potential for unexpected tax consequences associated with cryptocurrency and in particular the triggering of significant Capital Gains Tax liability when disposing of such assets.
Both practitioners and the Courts are constantly developing strategies to manage such assets in the family law context and to accommodate the unique complexities they present. If you require assistance dealing with cryptocurrency after the breakdown of a relationship, contact Mullane & Lindsay to speak with a member of our Team.
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