Cryptocurrency and Matrimonial Assets

What is Cryptocurrency?

Cryptocurrency is a digital currency, a new form of digital asset based on an encryption network used to conduct financial transactions. As this a decentralized system, cryptocurrency is not controlled nor interfered by any government and central authorities.

Why is Cryptocurrency Complicating Family Law Property Disputes?

Digital wallet is used when one trades with cryptocurrency. This digital wallet has a key to make the transactions which are then recorded with the user details encrypted. The person who is in possession of the digital wallet key, possesses the cryptocurrency.

While it is possible to search a particular set of digital wallet keys from its transactions, it is difficult to trace who owns the keys. This information can only be obtained from the owner of the digital wallet keys. As a result of this, owners of cryptocurrencies who are resolving their family law property disputes often have issues in making a full and frank disclosure of all financial matters.

It is important to note that cryptocurrency is an asset that need to be valued as it is required to be included in the asset pool for property disputes between partners. This means that the obligation to make a full and frank disclosure extends to disclosing any cryptocurrency held.

Evading proper disclosure of cryptocurrencies held is a breach of the disclosure obligation. The courts will have the power to dismiss a case, order costs against the person or imprison them for contempt of court. Even if cryptocurrency cannot be located, evidence suggesting that cryptocurrency assets are being transferred over a period of time can be used to make an unfavourable assumption against the offending party. With that, courts can make orders to adjust the property settlement accordingly.

If you would like to understand more about cryptocurrency and the matrimonial asset distribution, Straits Lawyers are here to help. Simply send us an email at info@straitslawyers.com or give us a call on 8410 9069 to arrange an appointment for an online interview.

Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.