Cryptocurrencies are relatively new in the financial world and are exchanged on an anonymous, fast-paced, and largely unregulated basis. Crypto is fast becoming one of the leading ways in which individuals are managing their money but what does it mean when it comes to dealing with the finances on divorce?
Under the UK law each spouse is under a duty of full and frank financial disclosure, which means that they are under a legal obligation to disclose all of their monetary and other assets. As part of the process, parties complete a Form E, which sets out all of the person’s personal assets and companies they are involved with. The form contains specific sections for assets such as bank accounts, but with the new development of the cryptocurrency online world, the courts have not yet updated the form to provide specific space for crypto.
Each spouse remains under a legal duty to disclose if they do have cryptocurrency but there are some ongoing difficulties presented by crypto within divorce proceedings, with one of the main issues being the volatility of the market and proving that the investment exists.
Recent market changes have shown just how volatile the cryptocurrency market can be, with the value of investments drastically changing in mere minutes. As the industry is largely unregulated, it is difficult to know what to expect next or to know that the money is secure. As crypto is an asset that needs to be disclosed, there are severe punishments if one spouse fails to provide information about their investments. However, the difficulty that the court is currently facing shows that whilst injunctions may be granted by a judge, it is practically very difficult to prove that someone has an interest in cryptocurrency during a divorce.
A digital wallet is by nature anonymous and is essentially just a code on blockchain and it is difficult to trace transactions. It is possible to hire a specialist forensic accountant to specifically investigate any alleged cryptocurrency but due to the nature of the investment, there is no real guarantee that they will be able to find the digital wallet and the true value of the investment could go unknown.
Overall, cryptocurrency in divorce proceedings is becoming increasingly important and the courts are in the process of updating their forms to specifically provide for the advancement of technology but it is unknown as yet when this will be available to use. Within the complex world of cryptocurrency within divorce, it is best to speak to a specialist family law solicitor who will be able to provide detailed advice regarding crypto and how it interlinks with the divorce process.
For specialist advice on any family law related issue contact Maguire Family Law by email: email@example.com or telephone: