Cryptocurrency is increasingly appearing in Australian family law property settlements. Bitcoin, Ethereum, stablecoins, NFTs and other digital assets can form part of the property pool when a couple separates.
Is cryptocurrency property?
Yes. Cryptocurrency is generally treated as property under Australian family law and must be disclosed as part of the property settlement.
The obligation to provide full and frank financial disclosure applies to cryptocurrency whether it is held on an exchange, in a private wallet, overseas or through a company or trust.
Can cryptocurrency be hidden?
Cryptocurrency can be difficult to identify, but it is not necessarily anonymous. Blockchain transactions can often be traced, while bank statements, exchange records and tax information may provide evidence of cryptocurrency holdings.
Where cryptocurrency has not been disclosed, the Court can make further disclosure orders and, where appropriate, draw adverse inferences or make costs orders.
How is cryptocurrency valued?
Cryptocurrency can be difficult to value because prices can change significantly in a short period. The appropriate valuation date and method will depend on the circumstances of the case.
Tax consequences should also be considered when cryptocurrency is sold or transferred.
What if relationship money was used to buy cryptocurrency?
Cryptocurrency purchased with relationship funds may form part of the property pool. If one party has deliberately or recklessly disposed of relationship assets, the Court may take that conduct into account. However, an automatic "add-back" is not the usual rule.
In Powell & Christensen [2020] FamCA 944, the Court considered cryptocurrency purchased using relationship funds and the treatment of those funds in the property settlement.
Get advice early
If cryptocurrency is involved in a separation, it is important to identify and value the assets as early as possible. Exchange records, bank statements and blockchain analysis may assist in identifying undisclosed holdings.
A family lawyer and, where necessary, a forensic accountant with blockchain expertise can help ensure cryptocurrency is properly dealt with in the property settlement.
This article is general information only and does not constitute legal advice. If you have a specific legal matter, please contact our office to arrange a consultation.
