The last five years have seen the rise of digital assets such as Bitcoin and other cryptocurrencies in individuals’ asset portfolios. While the adoption of these has become somewhat commonplace, it raises questions as to the treatment of these assets during separation.
Due to the rise in cryptocurrency many clients are enquiring about how crypto currency is dealt with when separating, is it matrimonial property, how is the value determined, and the financial disclosure process.
By all accounts, cryptocurrency is here to stay. Therefore, it is important for Australians to be aware of how the courts may determine property settlements during a divorce or separation that include cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a digital form of currency that is not distributed by any bank and instead moves within a centralised network. One of the key defining characteristics of cryptocurrency is that it is a non-government issued currency. The most popular and well known form of cryptocurrency is Bitcoin, but there are others such as Litecoin, Ripple, Ethereum and Zcash.
Cryptocurrency in Family Law
Cryptocurrencies are defined as property under Australian law, and as such are important to disclose during the process of finalising the financial severance of parties separating. During family law proceedings and property settlements, each party has a duty to disclose ‘any vested or contingent interest in property’ and ‘any other financial resources’ which includes cryptocurrency.
One of the main issues of cryptocurrency within family law proceedings and property settlements lie with the valuation of cryptocurrency. Cryptocurrency can fluctuate dramatically over a short period of time, which can cause significant issues if the value of cryptocurrency rise or fall greatly following Court orders.
Another significant issue with Cryptocurrencies as property is the anonymity of the asset. If a party refuses to disclose this asset, it can be significantly challenging to show these assets. Unlike bank accounts that can be easily linked to the owner, Cryptocurrency is much more difficult to prove ownership, as records may not be easily found through a subpoena.
If you suspect your spouse owns cryptocurrency, it is important to let your family lawyer know as soon as possible.
It is likely that family law property settlements will become more complex as cryptocurrency ownership becomes more prominent in Australia. The question is whether forensic experts will be able to keep up with this new technology in order to ensure a fair and equitable division of assets in divorce settlements.
If you have any questions about cryptocurrency in property settlements or family law divorce proceedings, please don’t hesitate to contact the Family Law team at Owen Hodge Lawyers on 1800 770 780 or send us an email at [email protected].