Last year, Catherine Howell (OULS Reporter, 2016-2017) wrote about cryptocurrencies questioning their place in society and legislation. For those of you unfamiliar with the term, Catherine explained that cryptocurrencies are “a form of digital money which is currently not tied to any centrally regulatory body”.
Bitcoin, divorce and non-disclosure
In the past, conversation on cryptocurrencies has been dominated by a focus on tech, criminals and the depths of the dark web.
Over time there has been a shift in the conversation towards the practical implication of cryptocurrencies on everyday life. Family law, and especially divorce, have been no exception to this.
Although unregulated, cryptocurrencies such as Bitcoin are an asset and are treated as any other matrimonial asset in cases of divorce. The starting point for a divorce settlement under English and Welsh law therefore, is for Bitcoin assets to be shared between both parties equally.
Although illegal, the non-disclosure of assets is not unusual in divorce proceedings. Unregulated, and not bound to the identity of its user, Bitcoin may be much easier to conceal, and harder to trace, than more traditional assets.
Once traced or declared, it can also be complicated to freeze Bitcoin assets. Courts do have a right to do so, but the lack of regulatory bodies means that it isn’t entirely clear how effectively these measures are enforced. The impact of this could be huge; as will traditional assets, effective freezing may be the only way to prevent the dissipation of assets by a spouse and the volatile nature or Bitcoin means that any Bitcoin assets that remain unfrozen have the potential to significantly fluctuate in value of the course of divorce proceedings.
Whilst the challenges may seem immense, lawyers are already applying existing law to overcome them and reach settlements for their clients.
Ffion Greenfiel of Seddons Solicitors, recently wrote on the subject for The Law Gazette. In it, she assesses the possible solutions to some of the challenges above, from offsetting cryptocurrency against other matrimonial assets to the division of the investment at source.
Ffion discusses both options in brief but extremely interesting detail. I won’t repeat her work her, but I strongly recommend that you read her article to gain a better understanding of these possible approaches.