In this current age of Cryptocurrency, couples moving forward with divorce are now having to deal with a new age problem. What happens to our cryptocurrency in the divorce? Because cryptocurrencies are relatively new, many individuals are unsure how to address the division of this type of asset, particularly since the value can suddenly change so dramatically.
So, what exactly is cryptocurrency? In understanding how cryptocurrency can affect the division of assets during divorce, it is first important to have a basic comprehension of what it means to own a “virtual wallet.” Cryptocurrency is a digital form of currency that is traded from one party to another without the involvement of a bank. This type of currency can be used to purchase goods or service like any other form of currency, but the difference is that cryptocurrency is all digital, decentralized from governments, and has no hard assets. Rather than centralized regulation by banks or other third parties, cryptocurrencies rely on a secure database called blockchain to validate a transaction. Some examples of popular cryptocurrencies are Bitcoin, Ethereum, and Dogecoin.
Cryptocurrency like any other marital asset, can qualify for division in a divorce. Once it is determined that cryptocurrency is a marital asset, the currency will need to be valued and converted into U.S. dollars. The most crucial aspect in dividing cryptocurrency is securing the precise value. In doing so, market fluctuations must be considered, as the value of crypto may drop and rise throughout the divorce litigation. This means that when an agreement is made between the parties about how much of the asset the other is taking, the price of the cryptocurrency may have changed. This could result in one spouse receiving more or less of the asset, depending on the amount of time that has passed between the execution of the agreement and the judgment of divorce. A divorcing spouse must also keep in mind that crypto is considered property by the IRS and, therefore, can be subject to capital gains tax. Thus, the transfer of cryptocurrency can have potential tax consequences.
If you or someone you know is fighting for their share of assets in cryptocurrency, please contact one of the attorneys at Lyons & Associates, P.C. We place a premium on personalized attention for your family law matters and pride ourselves on giving the appropriate guidance and information no matter how obscure the subject matter may be. For a private consultation, contact us by e-mail or call our office at If you or someone you know is fighting for their share of assets in cryptocurrency, please contact one of the attorneys.
By Marie Bucci, Esq. and Jake Jenkinson.