Cryptocurrency is a valid asset.
In Northern Ireland divorcing couples must make full and frank discovery of all financial documentation held by each of them. This may include savings, investments, premium bonds, ISAs and, in these times, Bitcoin and other cryptocurrencies. Cryptocurrency prices fluctuate constantly and something as little as a tweet from Elon Musk can send prices soaring. Needless to say, there are many amateur, and not so amateur, investors out there that hold a great deal of their wealth in crypto. But what happens to it in the event of a divorce?
What if one party suspects that their spouse owns cryptocurrencies?
It can be difficult to prove that your spouse owns cryptocurrency. Cryptocurrencies, such as bitcoin, are held in digital wallets which create “addresses”. They record transactions but they are not logged under individual names. The blockchain (a database with blocks of information chained together – “a ledger”) records all transactions that are made in Bitcoin, including which addresses they came from and went to. If you are able to find the transaction which includes a Bitcoin address, or the digital wallet, and can link it to your spouse, then it is possible to trace their transactions through the blockchain ledger.
If this cannot be found, then bank statements or PayPal accounts may have to be analysed for evidence of transactions. and one would then be able to link the cryptocurrency to the name and address.
How are cryptocurrencies valued for the purposes of division of assets?
Cryptocurrencies are treated in the same way as bank accounts or off-shore accounts but, given the rapidly fluctuating valuations of these currencies, they can create difficulties in negotiations. A suitably qualified expert may need to be appointed to quantify the value of the cryptocurrency but, like shares being divided up, the price may go up as well as down.