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How to divide cryptocurrency

On Behalf of | Nov 29, 2022 | divorce | 0 comments

If you invest in cryptocurrency, you do have to list it in your divorce proceedings. Cryptocurrency is an asset, despite having only gained public popularity in the last decade.

If you and your spouse invested in cryptocurrency, the division might be more complicated than other assets.

The value of cryptocurrency

Cryptocurrency values fluctuate regularly. Digital currency value can increase by $400,000 with no warning and then drop by $100,000 just as quickly. You may have to take volatility into account when you divide your assets. Since property division takes time, you may consider a formula that allows you to divvy assets differently if the cryptocurrency value changes. If you and your spouse want to keep the cryptocurrency, you can split it evenly to avoid complications.

The transfer of cryptocurrency

Once you decide how to divide your assets, you must transfer the property to the individual. Sometimes, you may have to transfer your cryptocurrency to your former spouse or vice versa.

When working with cryptocurrency exchanges, remember that they may not have as much experience working with divorced couples. You would have better luck working with a third party who understands how to transfer digital assets. During the transfer process, be careful not to share the key more than necessary.

When you divide digital currency, you must consider the impact of taxes. The assets behave like any other asset. For example, if your cryptocurrency saw growth within the last few years, you may have to pay capital gains taxes if you sell. Consider cryptocurrency as part of your post-divorce tax bill.