Once a word rarely heard or understood outside certain financial circles, cryptocurrency is now a buzzword that almost everyone is somewhat familiar with. But what happens if one or both partners own cryptocurrency during a divorce? The volatile nature of cryptocurrency can make it hard to divvy up in a fair and equitable manner, which can complicate your divorce.
If you or your ex-partner own cryptocurrency, you may be wondering what happens to it when you split. Discuss this and other questions you may have now by calling Coumanis & York at 251-990-3083 or 251-431-7272.
If your spouse is into cryptocurrency and you’re not, it may seem completely foreign to you. While you could spend years learning about the ins and outs of cryptocurrency, a quick overview should be enough to get you through your divorce. It’s a digital currency that is protected by cryptography on the blockchain.
Basically, this means that its transactions are not recorded by a central authority, such as a bank. Rather, transactions are verified and documented on a public ledger known as the blockchain. This makes it much more difficult to falsify or double-spend, which gives it significant benefits over traditional currencies.
There are thousands of cryptocurrencies out there, but you may be familiar with some of the most popular ones. They include Bitcoin, Ethereum, Tether, and Dogecoin.
Who Owns It?
A big question you’ll have to answer is who owns the cryptocurrency. If your spouse acquired it prior to the marriage, it is likely their separate property and will remain their separate property throughout and after the divorce. In this case, you do not have to worry about valuating or dividing it up. However, if it was purchased during your marriage, it will likely be considered marital property. In this situation, it will be divided in an equitable manner, much like the rest of your assets.
How It Is Divided During Divorce—and Why It Might Complicate Divorce Proceedings
Dividing cryptocurrency can be considerably more difficult than splitting up other assets. This is because cryptocurrency is incredibly volatile. It can triple in value in minutes, only to crash and be worth nearly nothing the next day. A lot of factors influence the worth of cryptocurrency, and predicting those factors is incredibly difficult. Now, consider how long a divorce takes.
From the decision to file until the divorce is granted, several months may pass. An initial valuation of the cryptocurrency could be useless a few months in if the currency has changed significantly in value. The money and time cost of reassessing your cryptocurrency’s worth can drag out an already painful and time-consuming process.
Once crypto is split up, there are several things the party receiving it can do. They may choose to offset it against other assets being split up in the marriage, allowing the other party to keep the cryptocurrency and simply giving the non-crypto owning party a greater share of other assets.
This is perhaps the easiest option that requires the least knowledge of cryptocurrency. The receiving party can also transfer the currency to their own crypto wallet and sell it that way. They may choose to keep the cryptocurrency and get involved in the market.
What You Can Do
This may seem like too much for you, particularly if this is your first real exposure to cryptocurrency. To start, tell your attorney if you believe your spouse owns cryptocurrency. Your spouse may try to hide it during the split or lie to you about its value, but you deserve your fair share if it was purchased during your time together.
Your attorney can ensure that your spouse gives a full accounting of their assets or hire a forensic accountant to uncover hidden assets. From there, you can explore your options regarding the division of assets and prepare for negotiations.
Prepare for Your Divorce with the Team at Coumanis & York
With the right legal team by your side, you can navigate your divorce with as little stress and anxiety as possible. Let us help you and fight for what matters most to you. Set up a consultation now by , calling our Daphne, AL office at 251-990-3083, or contacting our Mobile, AL office at 251-431-7272.