Does Cryptocurrency Qualify As An Asset In A Divorce Settlement In 2022?

Divorce, Family Law, Lawyer in McHenry County

Divorce laws require you and your spouse to disclose all your assets and liabilities at the start of the divorce proceedings. Cryptocurrency is considered an asset and must be listed and submitted to the court during a divorce.

As with stocks and shares on the market, cryptocurrency tokens have a current value shown when you log into your account. The values displayed become based on current exchange rates for each crypto token to US Dollars. Exchange rates are not permanent and can fluctuate at any time, so you must consider this when dividing property, but does it qualify as money when filing for divorce?

What is Cryptocurrency? 

A cryptocurrency is a form of digital currency which you can use as a medium of exchange. It has the same significant value as physical money but is not the same.

Cryptocurrency tokens are called “coins,” They exist on a digital database that records all transfers called “Blockchain.”

The blockchain records every sale and transfer of crypto tokens, and anyone on the internet can access them. Cryptocurrency operates on a peer-to-peer basis, so users can easily exchange assets with each other without having to deal with intermediaries.

As such, cryptocurrency does not carry the burden of international regulations because it is not tied to any government, bank, or brokerage firm. Crypto enthusiasts can earn cryptocurrency by mining on the blockchain or purchasing it from an exchange that sells crypto.

Understanding Cryptocurrency and Divorce

It is possible to find out if your partner owns cryptocurrency coins as you can track crypto assets on the blockchain through a specialized type of forensics called “on-chain analysis,” You do this by finding the “private key.”

Without it, it will be impossible to trace it to them or access the cryptocurrency. It is reasonable to expect your partner to be honest and transparent about their assets. Still, in the instance where that is not the case, you could find evidence to prove to the court that they own crypto and are being dishonest about that ownership.

You will need proof like transfers, documents showing investments, or financial statements. If your partner has crypto tokens on an exchange, you can get a subpoena against the third-party trade. If the tokens are held in a private wallet, search warrants can be issued to find the wallet’s private keys and deed phrases.

The state of Illinois considers all property held by both parties as marital property except those acquired before the marriage. If your partner received their cryptocurrency tokens before your wedding, they would get exempted from being listed on the asset list. If otherwise, the court will split the assets acquired during the marriage equitably.

If you are going through a divorce and want to be transparent about your cryptocurrency assets or make sure your partner is honest about their assets, contact us at Franks, Kelly, Matuszewich, and Andrle Attorneys at Law. Our committed team of attorneys is here to answer questions about divorce and virtual asset division.