Montgomery County Lawyer Discusses Cryptocurrency in a Divorce
What Is Cryptocurrency?
Cryptocurrency is a form of digital currency and just like traditional, physical currency, it can be used to purchase goods and services. It is considered a valuable asset as it can also be traded or sold and then stored to grow value.
Unlike traditional currency, however, cryptocurrency is produced, tracked, and managed through a distributed online ledger, such as blockchain, making it completely decentralized. This ledger records and manages transactions and protects the integrity of the financial data and the ownership of the cryptocurrency.
Since cryptocurrencies are not issued by a central authority, they are largely free of any government interference, manipulation, or regulation. Instead, they are maintained and valued by their owners.
Some of the most popular cryptocurrencies that should be evaluated in the property division of a divorce include:
- Bitcoin Cash
- Ethereum Classic
- Binance Coin
Owners hold their cryptocurrency in a digital wallet and then trade their cryptocurrency on an online exchange. An important concept to understand is that while the log of transactions is public, the data about individual transactions and who is involved is confidential.
Blockchain technology ensures the security of cryptocurrencies through cryptography, which makes cryptocurrencies almost impossible to counterfeit. Ultimately, this technology can make it extremely difficult to determine if an individual owns cryptocurrency.
Why Do You Need a Lawyer?
Pennsylvania is an equitable distribution state, which means a couple’s marital assets can be apportioned by the court in any way the court sees fit. Therefore, distribution may not necessarily be equal.
Evidently, it is important to ensure each party to a divorce is aware of the other’s assets, typically done during the discovery phase of divorce proceedings. Cryptocurrency is a common asset that is often hidden by one party. This matter can be very complex, which is why it’s important to have a skilled lawyer assist you.
Hidden Assets With This Type of Currency
Given the secure nature of cryptocurrency, it poses an issue to divorce proceedings. First, the asset is harder to track and second, the asset fluctuates in value. If you overcome the first hurdle and discover your partner has invested in cryptocurrencies, this then becomes part of the marital assets.
However, the value of that asset can change significantly before the process is complete and the divorce is finalized. One option is for the spouses to agree to value cryptocurrency based on its value at the time of distribution, at which time the spouse who owns the virtual currency transfers half to the other spouse.
Cryptocurrency and Forensic Accounting in Divorce
It may be worthwhile to bring in forensic experts if you suspect your spouse has invested in cryptocurrency. These experts can search your spouse’s devices and financial records for evidence.
Ensuring full disclosure of equitable distribution of marital assets in a Pennsylvania divorce can be a complicated and potentially contentious process, particularly when cryptocurrency is involved. The court considers several factors in determining equitable distribution.
How the Law Offices of Sheryl R. Rentz, P.C. Can Help
An experienced Montgomery County divorce attorney can help ensure all marital assets are located, accounted for, and correctly valued; help you reach a settlement agreement with your spouse; or argue persuasively to the court on your behalf if you are unable to settle out of court.
The Law Offices of Sheryl R. Rentz, P.C. has more than twenty years of experience. Our firm was founded in 1992. We can guide you step by step through the challenging processes of a divorce, including equitable distribution of marital assets. If you are facing divorce, call us at (610) 645-0100 to schedule a free consultation.
We know your problems are unique & special.
Call us, we will listen.