What You Need to Know About Cryptocurrency and Divorce

For many, cryptocurrency is the proverbial gift that keeps on giving. Popularly known as “crypto” or “bitcoin”, cryptocurrency has undoubtedly transformed the way people carry out transactions and store digital assets. However, like any other new phenomenon, bitcoin has got its own share of complexities and challenges, the main one being how it impacts divorce proceedings. In this post, we’ll take an incisive look at the topic of cryptocurrency and divorce, with a keen focus on how crypto affects division of marital assets.

What is Cryptocurrency?

A cryptocurrency, is essentially a digital asset or a form currency that you can buy, sell, spend, and trade on exchanges. Since cryptocurrencies are not based on an actual asset, they have no intrinsic value—value is strictly based on demand and supply. This makes them inherently unpredictable, superlative, and difficult to measure in terms of value.

Crypto transactions are recorded and stored in a database known as “blockchain.” At its most basic, a blockchain is a list of transactions that anyone can view and verify. Cryptocurrencies and the blockchain technology that powers them makes it possible to transfer value online without the need of a middleman like a bank.

Bitcoin is by far the most popular form of cryptocurrency. However, it’s not the only one. Other well-known forms of cryptocurrency include Litecoin, Zcash, and Ethereum.

Also worth noting is that crypto assets are not just coins. They can also be tokens, works of art, memes and trading cards, as well as high-value videos.

Cryptocurrency and Divorce: All There Is to Know

If you are itching to know how bitcoin affects divorce settlements, then this section is a must-read.

During divorce proceedings, cryptocurrencies present a significant challenge as they’re difficult to track, locate, and account for. Besides, there are no records to verify the existence of these bitcoins. So for the deceitful spouse, cryptocurrencies act as the perfect cover to hide away big-money assets.

Unlike banks and other financial institutions, cryptocurrencies have no records. This simply means that without a “private key”, the currency cannot be located or accessed whatsoever. It’s inherently beyond the other partner’s reach. A private key is a secret number used to sign crypto transactions and prove ownership of a blockchain address (similar to a password or a serial number). As for storage, the private key is typically kept in a virtual “wallet”. Many crypto owners tend to use special apps or software to store their private keys.

Hiding crypto in divorce is quickly becoming a mainstream issue. It’s made worse by the fact that cryptocurrencies’ value tend to increase substantially over time, something of which the owner might be aware, but the other person is not.

With that said, it’s incredibly important for divorcing spouses to reveal the existence and location of all property owned between them—cryptocurrencies included. In New Jersey, for instance, any property owned, whether jointly or separately, can be considered for the purposes of equitable distribution. Hiding such sensitive information could eventually land you in hot water with the law, especially if it’s later known that you did so deliberately.

Conclusion

Dividing crypto in divorce doesn’t have to be such a mind-numbing, stressful, and lengthy process. With the right family law attorney and a little bit of due diligence, you can navigate this phase of your divorce with relative ease and set yourself up for a better, healthier, more peaceful life thereafter.

At Petrelli Previtera, we strongly believe that liaising with a prenuptial agreement lawyer is the best way to get ahead of the curve and save yourself lots of headaches down the road. With this type of agreement in place, you can seamlessly address the asset, disclose the asset, and most importantly, protect that asset. Just recently, our firm was mentioned on Crypto News, so you can be sure we are head and shoulders above other law firms in this realm.

Our legal team is always up to date cutting edge law and we are here to guide you. We have dealt with difficult divorces involving a cryptocurrency and can help you with this issue as well. Schedule a consultation with our firm to further discuss this emerging topic.

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