As cryptocurrency (Bitcoin, Ethereum, etc.) becomes more common, it is creeping into various aspects of our day-to-day lives. Indeed, during last year’s Super Bowl, there were multiple ads for various cryptocurrency products. And, if you are in the process of a divorce, you may wonder if you or your soon-to-be ex-spouse’s cryptocurrency needs to be disclosed in the divorce to be divided.
Is cryptocurrency a marital asset?
Yes. In our state, cryptocurrency is considered an asset, like property (i.e., a home, car, etc.), not income. This means that it is subject to our state’s equitable distribution scheme in the divorce process.
Property distribution in Virginia is done through a process known as equitable distribution, which is just another way of saying that marital property is divided fairly and reasonably. This might mean equally, but not necessarily. Instead, the division is based on various factors, like the length of marriage, why the marriage is ending, if either spouse caused the disillusion, each spouse’s debts and liabilities, etc.
Any cryptocurrency you or your spouse acquired during the marriage is marital property, unless it was inherited by one spouse, individually, or gifted to one spouse individually. Though, both exemptions must be proven because the default assumption is that all assets are marital assets when they are acquired during the marriage in Virginia.
Since cryptocurrency is a marital asset, both spouses must disclose their entire cryptocurrency holdings, regardless of where they are stored. This can be hard to enforce as cryptocurrencies can be stored privately on hard drives, so specialists may be required to track down hidden crypto-assets.
Valuing cryptocurrency can be problematic because it is constantly changing, but as there are markets readily available for most of these coins, it is relatively easy to do. Though, it is a constantly changing and evolving area of the law, which makes divorcing with these assets complicated.