Dividing Cryptocurrency and Bitcoin During Divorce

Once upon a time, the concept of a payment system like cryptocurrency existed solely in the realm of science fiction. These days, not only is cryptocurrency real, it's used by millions of people around the globe every day. Cryptocurrency has a lot of user benefits. However, when it comes to divorce, these same benefits present some unique challenges to dividing marital property.

What is Cryptocurrency?

Cryptocurrency (also known as "bitcoin," "digital gold," and "magic internet money") is a type of currency which can be used to purchase goods and services online. Cryptocurrency has no physical form. It exists solely online and has no central database. Instead, information is stored in blockchain, a type of technology that decentralizes information, spreading it across many different computers, which makes it harder to track, hack, and trace.

Dividing Cryptocurrency During Divorce

Texas is a community property state, meaning that any assets, debt, or property collected while married belongs to both spouses equally. While cryptocurrency is a unique asset, it's still considered property and is subject to division upon divorce. To do this, the court will follow the same process as they do for all other marital property: identify property, characterize it as either separate or marital, value it, and divide it between spouses.

The Challenges of Dividing Cryptocurrency During Divorce

One of the challenges with cryptocurrency revolves around valuing its worth. Digital money has a constantly fluctuating worth, which can sometimes cause snags during divorce negotiations. To get the most accurate accounting possible, judges will often wait until the day a divorce is finalized to value an account.

Cryptocurrency was specifically designed with security and privacy in mind. If both spouses are aware of the account and both have the passcodes, then dividing cryptocurrency becomes relatively simple. On the other hand, if both spouses don't have the necessary passcodes, all that privacy and extra security makes tracking down assets tricky if one spouse is trying to hide assets.

Previously Undisclosed Assets

While cryptocurrency might seem like an attractive option for hiding assets from divorce court, it's definitely not wise to tempt fate on this one. It's extremely difficult to completely cover your tracks. Forensic financial professionals have tools, skill, and experience to uncover hidden assets. Furthermore, if the court does discover previously undisclosed assets, your original divorce order will likely need to be amended and your division of property reassessed. If you're worried that your spouse might try to hide assets through cryptocurrency, talk to your family law attorney as soon as possible.

Cryptocurrency Divorce Attorneys in Texas

If you have more questions about dividing cryptocurrency during divorce, we want to hear from you. Call us today at (972) 436-8000, or schedule a consultation online, and together, we can ensure that this unique marital asset is handled with the care it deserves.