As more people invest in cryptocurrency, I often get asked about how to handle this digital currency during a divorce. As with anything of value, cryptocurrency has a specific set of rules according to the court.

Cryptocurrency is an Asset

The court considers cryptocurrency as an asset, not simply income. Therefore, the cryptocurrency's value must be disclosed during divorce proceedings. The value can fluctuate wildly, so it's essential to be up to date on the fair market value when the actual division occurs. Remember, it is against the law to hide your assets during divorce proceedings.

How to Divide Cryptocurrency

California is a community property state, so most likely, you will divide any cryptocurrency down the middle. As with most assets, however, there are several options for how to effectuate the division.

You may:

  • Transfer—You can send the correct portion of cryptocurrency to your spouse. Your spouse will need to have an electronic wallet set up, and you must come to some agreement about fees. You both must keep accurate records of the transfer for tax purposes.
  • Cash-Out— Because cryptocurrency is so volatile, your spouse may opt to receive the current cash value. You must then sell your spouse’s portion and pay them cash directly. The other option is for your spouse to receive their share in cryptocurrency and then cash out themselves.
  • Offset — If both spouses agree, one may choose to receive the cash value of their portion of the cryptocurrency in the form of another asset. For example, one spouse keeps all the cryptocurrency, and the other receives a car that is roughly the cash value of their portion of the digital currency.


When You Can Keep All of Your Cryptocurrency

If you already had your own cryptocurrency before the marriage, that is most likely your separate property, not community property. However, while married, anything that you added to your cryptocurrency account is considered to be community property. The only exception is if you received cryptocurrency as a gift or as an inheritance.

What if my Spouse is Hiding Cryptocurrency?

Unfortunately, as a financial instrument, cryptocurrency is easy to hide. It may be stored on an external hard drive or as part of a password-protected online service or a hidden software program. If you suspect your spouse is hiding digital assets from you, there is the option of issuing a subpoena for all of their electronics. Once collected, a forensic specialist can determine if there is any evidence of hidden cryptocurrency.  This, however, is an extreme remedy that your spouse will likely fight.  

Park Family Law Can Help

Do you need help dealing with cryptocurrency in your divorce? To help you obtain the best results for all the complicated aspects of property and asset division during a divorce, call the attorneys at Park Family Law.

Whether you need an experienced mediator to amicably and efficiently settle your case or an aggressive litigator to get you the best results in court, Park Family Law can assist you every step of the way.