The only way in which cryptocurrency can be protected in the event of a divorce is via a prenuptial agreement, but even these are not immune to the wide-ranging powers of the family courts in England and Wales and the overarching power to ensure financial awards are "fair".
For those on the other side who suspect their spouse may be concealing assets in cryptocurrency, it can be difficult to get to the bottom of whether any such assets exist and, if so, how much is held at any one time.
The key is to find the threads to pull on that lead to the point of entry into or exit out of cryptocurrencies – bank statements and tax returns can both provide evidence of crypto being exchanged for fiat currency.
Given the opacity of crypto wallets, parties may find themselves reliant on inferences drawn from wider evidence, which can form the basis of a distribution of more accessible assets. Parties are obliged to make a full and frank disclosure of all their assets.
Non-disclosure is punished severely by the family court, including (in rare cases) imprisonment. The court also has the power to reopen divorce settlements if it can be proven that either party failed to disclose his or her assets.
Using cryptocurrency as a means of concealment is therefore risky and ill advised.
Hayden Bailey is head of private client and tax at Boodle Hatfield
