What is cryptocurrency?
HMRC defines cryptocurrencies as ‘cryptographically secured digital representations of value or contractual rights that can be transferred, stored and traded electronically’. To put simply, Cryptocurrency is a digital currency that can be used to buy and sell goods and services. Cryptocurrencies are currently unregulated. There are several cryptocurrencies in existence. The most common examples of cryptocurrency are Bitcoin and Ethereum.
What is the relevance of cryptocurrency Financial Remedy Proceedings?
During Financial Remedy Proceedings, both parties are under an obligation to provide full and frank disclosure of all their assets. Cryptocurrencies are considering to be an asset in the financial settlement. If either party has cryptocurrency, they must disclose the asset in their Financial Statement (Form E).
Can cryptocurrencies be valued?
The simple answer to this is yes. The courts have extensive discretionary powers to value assets including cryptocurrencies. However, cryptocurrency has no intrinsic value and is a fluctuating asset. The value of cryptocurrency does not remain constant and the value is determined by the supply and demand of the asset. This can make it difficult to accurately value cryptocurrencies.
How do I know if my partner is holding cryptocurrency?
If you suspect that your partner is holding cryptocurrency but has not disclosed it, you should inform your solicitor and preliminary investigations should be conducted. As both parties are required to disclose bank statements, you can carefully examine the statements to see whether there are any transactions which suggest buying or selling cryptocurrency. However, parties are only required to disclose the last 12 months bank statements so any cryptocurrency that was purchased or sold prior to the last 12 months may not be visible. If it is proving difficult to find evidence of cryptocurrency you believe that your partner is holding, you can instruct an expert a search for any cryptocurrency you partner may have.
What should I do if I suspect my partner is trying to hide or dispose their cryptocurrency?
If either party attempts to hide or not disclose any assets they have, they will be in contempt of court and can be liable to costs penalties. If you have suspicion that you partner is attempting to hide or dispose their cryptocurrency, you can to apply to the court for a freezing order to prevent your partner from disposing any cryptocurrency they hold.
How will the Court decide on dividing the crypto assets?
The court will consider the share each party has in the crypto asset and if one party does not have a crypto asset, the court will also consider whether that party is willing to waive their interest in the crypto asset due its fluctuating value and settle for a share in another asset. The court will also take into account various factor when deciding how to divide the crypto asset just as they would when considering any other asset.
For more information about cryptocurrency in divorce, please contact a member of our specialist divorce law team.