Bitcoin issue in matrimonial disputes

Bitcoin is reportedly becoming the latest ‘headache’ for matrimonial lawyers.

Specifically, two particular characteristics of Bitcoin (and other cryptocurrencies) make reaching a settlement difficult; anonymity and volatility.

Anonymity

The identification of Bitcoin holdings, where one party is not forthcoming, is likely to be an exercise of finding a needle in a (field of) haystack(s). Bitcoin transactions, although all published, hide personal information. As such, where one party suspects another of hiding funds as Bitcoin, the initial identification of the ‘missing funds’ parties may be possible using assumptions of date and amount, however, any further asset tracing would be complex.

Volatility

Even when the ownership of Bitcoin is known, how should it be quantified in reaching a settlement? To put this into perspective, in the last three months alone, the value of Bitcoin has fluctuated from c$7k to c$20k and back down to c$7k. It has even experienced falls of 30% within a day.

bitcoin issues matrimonial

Thus, the date (and time) on which Bitcoin is valued will have a significant impact on the value of a couples’ assets. The date of valuation, as with other aspects of divorce valuation, is ultimately a matter for the Court. Once a date is decided on, it then becomes a simple matter of calculating the exchange. Of course an alternative would be to transfer part of the Bitcoin holding from one party to another, although that could be fraught with concern and difficulty for the uninitiated.

How these issues play out in Court proceedings or settlement agreements is an issue that may well become run-of-the-mill in years to come but at this stage is likely to cause concern to all involved.

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