Sorting Through the Complexity of Cryptocurrency as a Financial Asset in Divorce
Financial concerns are always at or near the top of the list when a couple is going through a divorce. In the past, we’ve detailed the discovery process in divorce, and how one spouse is able to precisely track down what the other spouse is worth. However, throwing Bitcoin and divorce into the same discussion creates a new set of complexities.
You have to keep in mind the entire way that cryptocurrencies were designed. The main emphasis was always on both anonymity as well as the security of transactions. This makes the aforementioned financial discovery process far trickier than it would be for other types of assets.
Consider that you may be able to accurately identify an outgoing financial transaction from a bank account or credit card to a cryptocurrency wallet or gateway service designed to convert funds and process transactions. However, at that point the incoming money is lost. If it’s transferred to a different crypto market service, funneled through different cryptocurrencies, converted back to cash, or anything else, there’s no direct line or record of transaction A leading to transaction B.
There’s another issue when it comes to cryptocurrency & divorce, and that’s the matter of valuation. Cryptocurrencies are notorious for high-paced, rapid-fire market swings, which can offer an enormous increase or decrease in value in very little amount of time. So, at which point is there an accepted valuation of the assets? Is that valuation constantly tracked, reported on, and changed? What happens if there’s a wild swing in one direction or another after a valuation has been set?
We’re only beginning to scratch the surface of what this all means, as this story on Vice News reports. Consider that Bitcoin was only introduced in 2009, less than a decade ago. Ripple (XRP) didn’t debut until 2012, and Ethereum didn’t appear until 2015. While there’s been an increase amount of buzz and interest, these are still exceedingly new services, and it’s only been within perhaps the last two years that the general public has begun to view cryptocurrencies as legitimate.
Bitcoin and divorce is a subject we’re going to have to keep our eyes on, and it’s something we expect to be hearing much more about in the years ahead. If you’re facing divorce and looking for an experienced Maryland divorce attorney, give us a call at 240.395.1418 for a free consultation.