Divorce
The anonymity of cryptocurrency has even managed to complicate the already messy area of divorce and is expected to become a significant feature in modern day splits.
Jacqueline Fitzgerald, partner at private client law firm Wilsons, said: “Proving that one spouse has a substantial holding in a cryptocurrency and adding that to the marital assets can be a big problem.
“If one party refuses to disclose details of their bitcoin activities, or keep them a secret, then are untraceable.
“Unlike a UK bank or other financial institution, an overseas bitcoin exchange is unlikely to respond to a court order to disclose an individual’s assets or freeze them. Even in the UK, the usual methods of enforcement such as freezing injunctions are essentially worthless, because there is no centralised authority.
“If the crypto-investment was made more than a year ago it may not even show up on the usual review of bank statements. Unlike most traditional investments, bitcoin pays no dividends so there is almost no footprint for lawyers to identify,” Wilson said.
She added that the volatile nature of the price of bitcoin could cause difficulties when negotiating the allocation of assets.
“When the final order of the divorce has been signed, the spouse who swaps bitcoins for other assets in the divorce will not be able to claw back any funds if bitcoin collapses. Nor can they be forced to pay more if bitcoin soars – as long as they have made full disclosure.”
