When it comes to the financial side of divorce, couples are under a legal obligation to fully and frankly disclose their income and assets – and increasingly, that includes cryptocurrencies like Bitcoin.
As the popularity of cryptocurrency soars – the Financial Conduct Authority estimates that nearly two million people now own some – it’s becoming more important than ever to make sure it’s not overlooked in any settlement.
However, as cryptocurrency is notoriously hard to track and trace, often with little or no paper trail, that’s sometimes easier said than done.
This is where Wards Solicitors’ experienced Family Law and Divorce team can help – providing specialist advice on how cryptocurrency can be identified and what further questions should be asked of the other party to ensure it is.
So, what exactly is cryptocurrency?
Around for over a decade now, cryptocurrencies are a digital means of exchange which use cryptography – the computerised encoding and decoding of information – as a means of security.
Perhaps the easiest way to view it is as a system of virtual tokens with the value determined by market forces generated by those who want to buy and sell.
Most commonly bought through a specialist online exchange, an estimated 5,000-plus different cryptocurrencies now exist of which Bitcoin – worth just a few dollars in 2013 compared to around $40,000 in June 2021 – is probably the most well-known.
Although their performance is notoriously volatile, and the Financial Conduct Authority describes them as ‘very high risk, speculative investments’, more and more investors are now taking an interest.
Elon Musk recently revealed that his electric car company, Tesla, had bought £1.1 billion in Bitcoin and might soon accept payment in Bitcoin too.
Why should cryptocurrency be included as an asset?
Whilst some might try to argue that cryptocurrency is not property, the law on this is clear – HMRC taxes gains on digital currency just like any other capital asset.
That’s why there is absolutely no doubt that if one or both parties in a divorce owns digital currency it must be fully and frankly disclosed and potentially divided up by a court.
What can I do if my ex tries to hide cryptocurrency investments?
This is where a specialist solicitor, who knows which questions to ask, comes in.
It can be possible to identify cryptocurrency through bank statements which may show payments to companies and banks with a reputation for dealing in digital currency.
Or there may be evidence of payments into a cryptocurrency ATM, which converts money into cryptocurrency, or a crypto exchange, which exchanges money for cryptocurrency.
The key is to ensure the non-disclosing party fully understands the implications of hiding a cryptocurrency asset.
Courts have the power to re-open divorce settlements years later if non-disclosure can be proved and the penalties that can be imposed by the family court for non-disclosure can be severe and include imprisonment.
Get in touch
Wards Solicitors’ highly experienced Family Law and Divorce team can help and advise you about digital currency within a divorce settlement and how to safeguard your assets and position.
We have 12 offices across Bristol, South Gloucestershire, Bath and North East Somerset.
Click here to book an initial meeting or call us on 0117 929 2811.