How are crypto assets valued for divorce?

The Rise of Crypto in Divorce Settlements

As cryptocurrencies like Bitcoin, Ethereum, and NFTs become increasingly common in personal and business portfolios. The Economist may have said that “there is no sensible way to reach any particular valuation” for cryptocurrencies in August 2018, but crypto assets are now a regular feature in high-net-worth divorce proceedings. As such, the courts are required to consider the valuations provided, as well as the extent to which they should rely upon them. 

At Vardags, we have extensive experience advising clients on the treatment of crypto assets in financial remedy proceedings. Whether you’re concerned about valuation, disclosure, or division, our team is well placed to assist.

How are crypto assets valued?

Obtaining a reliable valuation of crypto assets is more difficult compared to valuing traditional assets though, as they generally trade in a highly volatile market and are subject to more extreme fluctuations in value.  

Courts typically consider:

• Current market price at a specific date (e.g. date of separation, filing, or hearing)
• Average value over a set period to account for volatility
• Type of asset (e.g. liquid tokens vs. staked assets or NFTs)
• Liquidity and transferability
• Tax implications, including Capital Gains Tax

Like quoted shares, the value of crypto assets will be determined by reference to their share price. However, a valuation obtained a few weeks ago may be very different to one obtained today. For example, whilst Bitcoin hit an all-time of $73,000 in March 2024, it fell to $61,000 in June 2024. Therefore, the court may set a specified date for valuation or take an average over a chosen time period. Where the parties have significant crypto assets, it will be advisable that they instruct a forensic accountant with crypto expertise. 

Division of Crypto in Divorce

Crypto assets are treated as matrimonial property if acquired during the marriage. The court may:

• Transfer crypto from one spouse to another via wallet-to-wallet transfer
• Order liquidation and division of proceeds
• Offset crypto against other assets (e.g. property or pensions)

In some cases, the court may aim to divide crypto by type, so both parties share the same exposure to market risk.

Disclosure and hidden crypto

Crypto assets must be disclosed like any other asset. However, due to their decentralised and pseudonymous nature, they can be difficult to trace. If you suspect your spouse is hiding crypto, you can instruct a forensic expert to trace activity and even apply for a freezing order to prevent disposal of assets.

Courts take non-disclosure seriously and may penalise parties who attempt to conceal digital wealth.

If you’re considering or going through a divorce and you or your spouse have significant crypto assets, we can help. Click below for a free initial consultation with one of our expert divorce solicitors. 

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