What is cryptocurrency? Can cryptocurrency be included in a property settlement?
Whether in a “bull” or “bear” market, the value of any interest in cryptocurrency will certainly be considered part of a property settlement after separation or divorce.
Cryptocurrency is a type of virtual currency. Unlike Australian dollars, cryptocurrency is destabilised, meaning it works the same way globally and is not tied to one country. The most well-known form of cryptocurrency is Bitcoin.
Cryptocurrency trade is tracked by a “blockchain”, an expanding list of data called blocks linked together using cryptography. Each block contains a timestamp and transaction data. Each block comprises data about the block before it, so they form a chain – hence the term “blockchain”.
Cryptocurrency is considered an asset that can be divided in an Australian property settlement after separation or divorce.
There is a requirement for separating couples in Australia to disclose virtual currency transactions as part of their financial disclosure requirements in property settlements. It is important that the spouse who has an interest in cryptocurrency be upfront about the asset's existence. Disclosing financial assets forms part of separating couples' preaction procedures, so a spouse hiding an interest in cryptocurrency would mean they are not complying with the Federal Circuit and Family Court of Australia Rules.
Since the currency exchange rate of cryptocurrency to dollars tends to change rapidly, the valuation will be as up-to-date as possible. Property pools that exist at Trial can be significantly different from those that exist at separation. Cryptocurrency carries an increased risk of extreme value depreciation or appreciation. The period between separation and agreement could mean a significant decline in the value of cryptocurrency, so it is always recommended to resolve property matters sooner rather than later
Dealing with cryptocurrency as part of a matrimonial or de facto property settlement is a new concept and a developing area of law in Australia, but it is here to stay.
Cryptocurrency division is becoming more common in family law matters. If you are getting divorced or separating, and dealing with cryptocurrency assets, contact us today at 1300 414 855.
We help families reach a resolution so they can move on peacefully.