Cryptocurrency and Divorce

Cryptocurrencies—such as Bitcoin, Ethereum, and others—have risen in prominence over recent years. With ever-fluctuating values, these digital assets can introduce a new layer of complexity when couples divorce. Below, we discuss the challenges, legal considerations, and best practices for dealing with cryptocurrency in a divorce settlement.

The Rise of Virtual Currencies

In January 2022, the Law Society highlighted that there are “almost as many definitions of a cryptocurrency as there are cryptocurrencies”. While there are many forms of digital currency, Bitcoin is the example most commonly encountered in family proceedings. Introduced in 2008, it has seen its value climb significantly over time; as of June 2022, 1 BTC was worth £17,124.

Cryptocurrencies themselves are a subset of digital assets, which can also include digital files, domain names, and more. By December 2021, more than 9,000 different cryptocurrencies existed, with a total market value exceeding £1.76 trillion, of which Bitcoin is just one prominent example.

Challenges Posed by Cryptocurrency in Divorce

1. Volatile Valuations

Cryptocurrency values can fluctuate rapidly, sometimes dramatically within a single day. This volatility makes it difficult to establish an agreed valuation in divorce proceedings. Both parties and the court must rely on up-to-date information, often obtained from cryptocurrency exchanges or professional appraisals.

2. Hiding and Tracing Assets

In divorce and other financial matters, each spouse has a duty to provide full and frank financial disclosure. However, cryptocurrencies can be difficult to locate and confirm, due to their relative anonymity and use of digital wallets. The public ledger (blockchain) does record transactions, but determining real ownership generally requires:

  • Public and Private Keys: Without these keys, pinpointing ownership is almost impossible.
  • Transaction Records: Spouses may need to produce statements or exchange logs from specific cryptocurrency platforms.
  • Expert Assistance: Digital forensic specialists can help confirm a spouse’s activity, user identity, or transaction history.

How Cryptocurrency Differs from Traditional Assets

Unlike traditional currencies, cryptocurrencies:

  • Are not regulated by governments or central banks.
  • Function entirely in digital form, with no physical notes or coins.
  • Are tracked via a blockchain, an open ledger that updates every few minutes.
  • Involve “keys” to manage transactions: a public key that anyone can see, and a private key kept secret in a digital wallet.

Because of this decentralised framework and potential anonymity, cryptocurrencies require a particular approach when evaluating and disclosing assets in a divorce.

Including Cryptocurrencies in Divorce Proceedings

Legal Status in England and Wales

Cryptocurrencies are legally regarded as “property” in England and Wales. This means they can be subject to property adjustment orders under section 24 of the Matrimonial Causes Act 1973. In other words, they are assets that can be divided or transferred between parties in a financial settlement, just like any other form of property or investment.

Accurate Valuations and Ongoing Disclosure

Due to the rapid and sometimes extreme fluctuations in value, cryptocurrencies should be re-valued at each stage of negotiation or court hearing. Parties must be prepared to provide up-to-date exchange rates or statements from the relevant blockchain or trading platform.

Dividing Cryptocurrency Assets

Pension-Style or Lump-Sum Approach

When negotiating or litigating the division of cryptocurrencies, spouses can:

  1. Agree on a Lump-Sum Transfer: Based on an agreed valuation (or multiple valuations to track changes), one spouse may transfer a certain amount of coins to the other’s digital wallet.
  2. Offset Against Other Assets: Similar to how pensions and property might be offset, it may be appropriate for one spouse to retain more of another type of asset while the other retains the cryptocurrency.

Court Involvement

If negotiation or mediation does not yield a satisfactory agreement, the court can order the sale or transfer of cryptocurrency. They may:

  • Award a set portion of the cryptocurrency to the non-owning spouse.
  • Offset the cryptocurrency against other assets to balance the financial outcome.

Key Takeaways

  1. Include Cryptocurrency in Financial Disclosure: Treat it like any other asset. Failure to disclose can lead to serious legal consequences.
  2. Seek a Reliable Valuation: Refresh valuations regularly due to price volatility.
  3. Consider Digital Forensics: If you suspect hidden cryptocurrency, an expert can help you identify and trace it.
  4. Plan for Volatility: Build contingencies into settlements to reflect shifting market values.
  5. Secure Legal Advice: Cryptocurrency remains a relatively new and fast-evolving domain. Speak to an experienced family solicitor for guidance.

Need Expert Advice?

At HM & Co. Solicitors, our family law team understands the complexities introduced by cryptocurrency in divorce and financial disputes. We work alongside specialists—such as digital forensic investigators and financial experts—to ensure all relevant assets are identified, accurately valued, and fairly divided.

HM & Co. Solicitors
186 Lower Road
Surrey Quays
London SE16 2UN

Telephone: 02071128180
Email: info@hmsolicitorsltd.com

If you need tailored help concerning cryptocurrency assets in your divorce, get in touch. We provide clear, informed support designed to safeguard your financial interests while navigating this emerging and complex asset class.

Your Questions, Answered

FAQs

Divorce FAQs

What is divorce?

Divorce is the legal process of ending a marriage through a court application. Once granted, both individuals are no longer legally married. However, certain legal obligations—such as maintenance orders or child arrangement orders—may still apply after divorce.

How do you get divorced?

There are four main stages in the divorce process:

  1. Complete a divorce application (Form D8) as a sole or joint applicant and pay the court fee (currently £593).
  2. Apply for a conditional order after your spouse acknowledges the application and a 20-week waiting period passes.
  3. Apply for a final order (6 weeks after the conditional order), which legally ends the marriage.

Keep in mind that divorce itself does not settle financial matters or child arrangements. A separate financial settlement and any necessary child arrangements must be made.

What are the grounds for divorce?

In England and Wales, a no-fault divorce system is in place. You only need to state that your marriage has irretrievably broken down, without assigning blame.

What is a 'divorce application'?

A divorce application (Form D8) initiates the divorce process. You can apply on your own (sole applicant) or jointly with your spouse. If you receive an application, you become the respondent. Applications can be made online or by post, and a court fee of £593 applies at the time of writing.

Can I get divorced?

To be eligible for a divorce or to dissolve a civil partnership, you must have been married or in the civil partnership for at least 12 months. If you haven’t reached this timeframe, you may be able to annul the marriage or seek a judicial separation.

Can we just separate? I don’t want a divorce.

If you separate without divorcing, you remain legally married and financially linked. Divorce-related financial claims remain open and can be dealt with later. Judicial separation is an option that allows you to remain married but legally separate. However, it is rarely used. Obtaining a divorce fully ends the marriage, although resolving financial matters requires a separate financial order.

I am in a same-sex marriage or civil partnership. Does this affect the process?

The process for ending a same-sex marriage or civil partnership is the same as for opposite-sex marriages.

There is violence in my relationship. What can I do?

If you are in immediate danger, call 999. You can also seek protection from the family court, such as orders regulating who lives in the family home or preventing certain behaviours. Further information and support are available for individuals facing domestic abuse.

What if my spouse refuses to accept the divorce?

It is difficult to halt divorce proceedings. Disputes are limited and usually involve the validity of the marriage. Most often, the divorce will proceed even if one spouse does not cooperate.

What if my spouse refuses to acknowledge the divorce application?

If your spouse does not respond to the application within 14 days, you can arrange for the papers to be served in person by a court bailiff or process server. Once service is proven, you can proceed with the divorce, regardless of cooperation.

 

What is a conditional order?

A conditional order confirms that the court sees no reason to prevent your divorce. Although an important milestone, it does not end the marriage. Both parties remain legally married until the final order is granted.

 

What is a final order?

Six weeks after the conditional order, you can apply for the final order, which legally ends your marriage or civil partnership. Keep the final order safe for future use, such as if you remarry or revert to your maiden name. It’s generally advisable to finalize financial arrangements before applying for the final order.

How long does a divorce take?

On average, a divorce in England and Wales takes about six to eight months. There are waiting periods built into the process:

  • A 20-week cooling-off period after the court issues the application, before you can apply for a conditional order.
  • A six-week wait after the conditional order, before applying for the final order.
    Delays can occur due to lack of cooperation, complex financial or child-related issues, or court backlogs.

 

How much does a divorce cost?

The court fee for processing a divorce application is currently £593. Additional costs vary depending on complexity, legal representation, and whether financial or child arrangements are contested. Fixed-fee divorce options may be available. Handling the divorce yourself online avoids solicitor fees for the divorce process itself, but legal advice on finances is strongly recommended.

 

Can I get Legal Aid?

Legal aid for family law matters is limited and generally available only in cases involving domestic abuse, child welfare, or social services. We do not offer legal aid; check the government’s legal aid website for approved providers.

 

Who pays the legal fees in a divorce?

Typically, each person covers their own legal costs. The applicant pays the court fee. In a joint application, applicant 1 usually pays the fee. You can ask the court to order that costs be shared, but such orders are rare. Costs related to the divorce itself are separate from those incurred when resolving finances and/or child arrangements.

 

Do I need a solicitor?

You can file the divorce application yourself. However, it’s strongly advised to seek legal advice on financial settlements. A solicitor ensures that your financial arrangements are fair and legally binding.

 

Can I use the same solicitor as my spouse?

No. Using the same solicitor would create a conflict of interest. Both parties should seek independent legal advice.

 

Will involving divorce law specialists make the process more hostile?

Not at all. Many solicitors are members of Resolution, a group committed to resolving family issues without conflict. Specialist lawyers aim to reduce hostility, not increase it.

Will I have to go to court?

For the divorce process itself, you usually won’t need to attend court if both parties cooperate. If financial or child arrangements are agreed amicably, these can be formalized without a hearing. However, if no agreement is reached, you may need to attend court hearings.

Can I change my name after divorce?

You can change your name at any time by simply starting to use a new one. However, a deed poll or similar document is often required to update official records. You cannot change your children’s names without the other parent’s consent.

What if mental health issues affect one spouse’s ability to make decisions?

English law assesses capacity based on the specific decision at hand. If a spouse cannot understand and consider information related to financial settlements or divorce decisions, a doctor may be needed to assess their capacity. If they lack capacity, a ‘litigation friend’ can be appointed to make decisions in their best interests.

 

Are there alternatives to divorce?

Yes. Judicial separation, annulment, and separation agreements are possible alternatives. These options might suit those not ready for a full divorce.

 

What is collaborative divorce?

Collaborative divorce involves both parties and their solicitors committing to resolving issues without going to court. This process encourages open communication, reduces conflict, and allows couples to maintain control over decisions, particularly when children are involved.

 

What is mediation?

Mediation involves meeting with a neutral mediator to reach agreements on finances and child arrangements. It can be faster, cheaper, and less stressful than court. While the mediator does not provide legal advice, you can seek independent legal guidance alongside mediation. Agreements reached can be made legally binding with the help of a solicitor.

What is arbitration?

Arbitration is a form of dispute resolution where a neutral arbitrator acts like a judge, reviewing evidence and issuing a binding decision. Benefits include flexibility, confidentiality, and potentially lower costs compared to court. However, both parties must agree to arbitration, and fees for the arbitrator apply.

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