Cryptocurrency is a relatively new class of assets, which can raise many questions for anyone who owns it and is in a divorce. It also raises questions for the other spouse, who may wonder if crypto assets are being hidden from them. If you’re in a dissolution of marriage, will cryptocurrency have to be divided under the current community property laws? How can you make sure it’s not a hidden asset that’s kept from the proceedings? Here’s what you need to know.
Finding Hidden Cryptocurrency Assets in a Divorce
If you’re worried that the other party to a divorce is hiding cryptocurrency assets, you want to figure out how you can find that information. People get concerned that they can’t find the crypto because so much of it feels like a mysterious way to gain or create assets. Many crypto values are dropping drastically today, but there are still some that are doing well, and the chance exists that there could be significant assets or income from them for some people.
Cryptocurrency is generally exchanged on the blockchain. People like to use crypto as a way to hide assets. Now, though, a law in the US requires any crypto wallet or exchange to be aware of who’s investing with them. To do that, you must provide a government-issued ID, such as a driver’s license. You also have to link the wallet to a bank account associated with that ID. That gives a paper trail; bank records can show transfers to the crypto wallet or exchange that can be tracked.
How Cryptocurrency Translates to Income
The second part of a cryptocurrency issue to pay attention to in a divorce is how people make money from it. Some people make a lot of money, which generally happens when they’re day-trading. This is part of the reason for the meltdown in prices that has occurred recently. Even with the lower prices, people buy it when it drops and then sell it when it increases again. If there’s enough volume with buying and selling, it’s possible to make money with multiple trades.
If a lot of money comes in from it, that money should be available for support. But it also comes down to the individual facts of each case since cash that’s made and reinvested isn’t considered the same way as money that’s created and held. Making money from stocks, for example, and reinvesting in stocks, isn’t money that can be used as income for support. How someone handles their crypto trading, how much they’re making, and what they do with the money all matter.
Consider Income and Expenses When Discussing Crypto With Your Attorney
The question your attorney will want is, is the other spouse making enough money to justify paying an attorney to go looking? That can cost a lot, as well, and won’t be worth it for small amounts. If you’re the party who’s holding crypto, be sure you disclose it in your dissolution or support proceeding. No matter which side of the process you’re on, working with an attorney can help. Reach out to Hartley Lamas today, and let us get your questions answered.