Answering Questions on Crypto Assets in Divorce
Victoria Clarke is a Crypto Divorce Solicitor. Here are some questions Victoria is often asked when crypto assets need to become part of the financial settlement:
1. What do you do if someone comes to you who is divorcing someone with crypto assets?
I would ask my client for as much information as they have about the crypto assets, and use that information to help our further investigations into those assets.
2. How can you prove or find out what crypto assets they have?
You can look at the activity in bank accounts, you can request browsing history, you can even request information of what websites a specific IP address has used, to determine whether there has been any crypto activity
3. What if they say they lost them or got hacked?
As with anything, they would need to show evidence of this loss or hacking. I am not sure many can show evidence of simply losing an asset such as this.
4. How are agreements reached on dividing up crypto assets? What do you do about the volatility- as especially with altcoins, they might suddenly drop 95% or go up 5x?
I have to work with assets that change their value already, although not quite as quickly as crypto assets currently. Either a settlement would be reached on a percentage of the crypto asset which is then dependant on value, or the spouse without the crypto may choose to waive their interest in it because of volatility and instead take a larger percentage of a more stable asset.
5. Have there been any crypto divorces go through yet?
All divorce proceedings are confidential, unless they are reported case law, and so there could have been several cases in the lower courts already that have involved crypto assets but we do not know. At Watson Thomas, we have had a few, so it is quite likely.
6. What do you imagine the future of divorces with crypto assets to be?
I think it will become more common, and people will become more comfortable dealing with them as part of a settlement. We imagine there will be a test case or two about how this asset should be treated, but until then it will be on a case by case basis.
7. How did you start working in crypto divorce law?
I have been a family lawyer for many years. I first became involved in the crypto space in 2011 and it was more of a personal hobby at the time. I never imagined crypto would become part of my work as well. When I realised that there are barely any people in the family law arena that understand crypto assets, I knew that this was something I could really get involved with.
8. What would your advice be to anyone thinking about getting married to someone with crypto assets? or to someone marrying someone who they know holds crypto?
If you are about to get married, and you are worried about your assets on divorce, then I would always advise considering a pre-nuptial agreement setting out what will happen to your assets if you do get divorced, and how you will support each other. This would be the case whether they were crypto assets or not; just because they are crypto assets does not mean there are any special measures. You could spend the marriage checking up on their wallet balances and their online account activity, but I am not sure that is a healthy marriage!
9. What about to someone who is already married but in a shaky relationship- is there anything they can do now to avoid a messy crypto divorce?
Any divorce is as messy as the people involved want to make it. If both people are reasonable and fair, then the process should be quick and affordable irrespective of the assets involved. If they take a polarised view of how things should be divided, then it gets difficult.
10. What actually is the law in the UK surrounding crypto assets and divorce? Does this vary much between different countries?
Divorce Law in England and Wales does not cover specific assets, but rather how the parties’ total assets should be divided in accordance with the Matrimonial Causes Act. This remains the same following the introduction of crypto. What will be interesting in the future is where we see coins/tokens used for currency as opposed to being seen as an asset like shares or stocks.
11. What if your client is the person holding the crypto assets- is there anything they can legally do to protect or hide their assets?
You cannot legally hide your assets. The divorce process requires both people to give full disclosure of all of their assets.
At Watson Thomas our staff can work from home and access all systems so even if all are required to self-isolate this will not affect the day-to-day running of your case. We can also hold appointments via telephone and video link as needs be to ensure that your service is not interrupted.