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Cryptocurrency and divorce

On Behalf of | May 19, 2022 | Blog, Divorce

The financial settlement of a divorce is always contentious and difficult for estranged couples in Texas. The different kinds of financial assets that each spouse holds can be hard to detangle, evaluate, and divide. Th rise of cryptocurrency has made this much more complex than it used to be.

Crypto and divorce

The growth of crypto means that today, there are many people who hold these types of investments. There are many reasons for people to invest in crypto, but one of the special characteristics of the asset class is that it is harder to track and identify who owns it and how much of it they have. That can be a problem in a divorce settlement, because one spouse might be able to hide any crypto assets that they own. Since they are not stored in a regular bank account or brokerage account, it is simple to conceal that a person owns them and hold onto them through divorce even if they are marital assets.

Another issue is the tax handling of crypto. Depending on how the timing of the purchase, how long it was held, and other factors, selling crypto to divide its value as part of asset division might entail capital gains taxes. That can cut into their value. Moreover, the frequent volatility and changes in price can mean crypto assets are hard to assess during the course of the divorce process.

Crypto has provided a new and interesting way to invest money, but it has also made divorces much more complicated for several reasons when one or both spouses holds some of these assets.