Where there are finances to be resolved, it is advisable to obtain a Financial Order to record how the matrimonial finances are to be distributed. The first step to address the finances will be for both parties to complete and exchange their full and frank financial disclosure. People are increasingly treating crypto assets as a hobby or an investment opportunity and, however big or small your current holding, it must be disclosed.
Crypto assets are becoming increasingly popular and it is estimated that nearly 1 in 10 adults in Britain have dipped into this market entering into digital ownership. Whilst it can be difficult to determine the values of crypto assets as they have a tendency to fluctuate, they must be disclosed when addressing finances on divorce.
What are crypto assets?
Crypto assets or crypto currencies as they are otherwise known, are digital assets meaning they are held securely online by individuals. There are thousands of types of crypto assets but a few types are more commonly found including Bitcoin and Ethereum. There are also non-fungible assets/tokens (NFTs). These digital assets vary to more conventional assets as there is currently no regulatory body overseeing their use. They are held electronically in a decentralised system meaning they are unregulated by governments and central banks.
Bitcoin is a form of crypto currency which can have a value which increases and decreases depending on the market at the time. Bitcoins can only be bought online and are held in ‘wallets’ which are accessed via a public and private ‘key’. Public keys facilitate transactions between parties and provide proof of all transactions on a blockchain.
Values for crypto assets can fluctuate enormously and therefore it is important that the values are regularly updated when addressing finances on divorce.
What can the Court decide about crypto assets?
The Court can make orders in respect of crypto assets in much the same way as the more traditional assets. A crypto holding can be transferred from spouse to spouse in its entirety or in a specific proportion by creating a separate crypto account. It is also possible for the Court to order for a crypto holding to be sold and the proceeds divided.
Due to the unpredictable nature of crypto assets there is difficulty in ensuring a fair outcome and this is something Judges are attuned to. Judges will often aim to ensure both spouses walk away with a similar proportion of each type of crypto asset making them exposed to the same risk of loss and/or gain.
Glossary
Wallet – A program that stores cryptocurrency keys (public and/or private) and allows access to your coins.
Public key – Public keys facilitate transactions between parties and provide proof of all transactions on a blockchain.
Private key – Private keys are instruments used by those with ownership over crypto assets and authorise users to make transactions from their account.
How can Tozers help?
Tozers can help by providing expert legal advice and guidance on how to navigate the complexities of dividing crypto assets during a divorce. Our team of experienced lawyers can assist in determining the value of crypto assets, ensuring a fair distribution between spouses, and addressing any legal issues that may arise.
