At Clarke Willmott, we regularly advise on complex financial remedy cases involving a wide range of assets. Increasingly, this now includes crypto assets such as Bitcoin and other digital currencies.
If you or your spouse hold crypto, it is essential to understand how these assets are treated on divorce.
What are crypto assets?
Crypto assets are a form of digital currency that exists exclusively online. Common categories include:
- Exchange tokens (such as Bitcoin)
- Utility tokens
- Security tokens
- Stablecoins
Unlike traditional money, crypto assets are not controlled by a bank or government. Instead, they operate on decentralised networks and are currently unregulated, which can make them more complex to identify, value and share on divorce.
Crypto assets are typically stored in one of two ways:
- Hot wallets – online platforms or apps
- Cold wallets – offline storage such as a USB device
Do crypto assets have to be disclosed?
Yes. Crypto assets must be disclosed during divorce financial proceedings.
They should be listed in section 2.4 of the Form E as an investment. As part of the legal duty of full and frank disclosure, you must provide up-to-date evidence of the value of your crypto holdings, usually by way of screenshots or account statements from the relevant platform or wallet.
This duty is mandatory. Failure to comply can have serious consequences.
If payments into crypto accounts are identified but the assets have not been disclosed, this is likely to be challenged. Non-disclosure can result in court penalties, including warnings, costs orders or, in serious cases, findings of misconduct.
How are crypto assets valued?
Crypto assets are known for their price volatility. The value disclosed in the Form E should reflect the current market value at the date of completion, with updating disclosure provided throughout proceedings.
When negotiating a settlement, it is important to consider transaction costs, potential Capital Gains Tax liabilities, and the net value of the holdings.
Do crypto assets form part of the matrimonial pot?
Crypto assets are treated like any other asset on divorce. Whether they form part of the matrimonial pot depends on factors such as how and when they were acquired, whether they were intermingled, and their source, in line with principles set out in cases such as Standish v Standish.
How we can help
Crypto assets are becoming increasingly common, and the law is evolving alongside this emerging asset class. If you or your spouse hold digital assets and you are unsure how they will be treated on divorce, early specialist advice is essential.
Adam Maguire is a partner in the family team at Clarke Willmott who specialises exclusively in complex divorce finances and financial remedy proceedings.
