Divorces are increasingly dealing with a new kind of asset: Cryptocurrencies. They are volatile and can be difficult to trace. What is a cryptocurrency, why are they so popular, and how are they a part of a property division in divorce?
Bitcoin is a type of cryptocurrency, and they are the latest way to potentially stash money so it can’t be found when it comes to dividing the marital estate.
Due to the supposed anonymity of Bitcoins, it seems practical and logical that people try to hide their cryptocurrencies from their spouses.
Cryptocurrencies are growing in ever larger value, and they are popping up more in divorces as a new class of asset to divide.
The law is familiar with the redistribution of many types of assets, like cash, bank accounts and other investments, but cryptocurrencies may be charting new ground.
Cryptocurrencies are digital currencies not associated with a central government. Bitcoin, the biggest and most well-known, was developed back in 2009.
They are created and controlled by computer programs, or algorithms. Those algorithms lay out how transactions are made and recorded, and how new coins or tokens are found and released.
People and organizations known as “miners” keep records of every transaction, and attempt to solve complex computer problems that, when solved, reward them with new coins.
In effect, users record transactions directly between peers, rather than through banks or other intermediaries. That system is known as a blockchain and the transactions, and even the currencies, are sometimes referred to as “peer-to-peer.”
A major difference between a cryptocurrency and the U.S. Dollar is that, unlike the U.S. Dollar, the total amount that can ever be in circulation is limited. Because the total supply of the currency is restricted, you do not use more coins to pay for goods and services, but less.
Florida Property Division
I’ve written about property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.
Generally, courts set apart to each spouse their non-marital assets and debts, and then distribute the marital assets and debts between the parties. In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.
In Florida, if there is a justification for an unequal distribution, the court can do so, but must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.
Additionally, courts can consider the intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within two years prior to the filing of the petition.
A major fight which can take place during mediation is whether a spouse is responsible for the 50 percent drop in value of a cryptocurrency.
One of the main problems with a cryptocurrency is their high volatility. It is hard to equitably distribute volatile assets which can gain or lose so much value so quickly.
The price of Bitcoin, for instance, the world’s biggest and best-known cryptocurrency, almost halved in value from its peak value in December.
Cryptocurrencies will be a significant feature in a large number of divorces. Although they can be traceable, cryptocurrencies are highly volatile, and they are not going to go away.
The Business Insider article is here.