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or more than a decade now, we have been hearing about people getting rich by investing in “cryptocurrency” or “crypto.” This type of investment involves complicated technology, making it difficult to categorize and understand. When spouses are going through a divorce, it is important to find and divide these kinds of assets. This post will discuss how to deal with cryptocurrency in a divorce.
Cryptocurrency is digital currency that does not exist in a tangible form and is not dependent on the existence of a bank or government. Unlike cash or a retirement account, you cannot demand the payment of your funds from a banking institution. Rather, companies like BitCoin and Etherium provide investors with ability to directly purchase, sell, and use cryptocurrency. Cryptocurrency is assigned an individualized “key,” which is necessary to use the asset.
Even though cryptocurrency only exists in an intangible form, it is still property that must be addressed in a divorce. Because Texas is a community property state, the court must divide all assets owned by the parties. This can include an asset such as cryptocurrency.
Cryptocurrency has some unique challenges. It is necessary to value all of the assets involved in a divorce. Cryptocurrency values can vary wildly, so the parties will need to agree upon a date to value the asset. Also, when dividing cryptocurrency, it is important to account for these fluctuations. It may not be fair to award all of the cryptocurrency to one spouse, in the event the value drops dramatically.
Another challenge is that cryptocurrency may not be as easy to divide as, say, a bank account. To safeguard the interests of both spouses, the final paperwork will need to have provisions dealing with each of the parties accessing the cryptocurrency, selling it, paying taxes on it, or otherwise using it.
