What Happens To Digital Assets After An Orlando Divorce?
Cryptocurrency isn’t just a fad anymore. While China has cracked down on Bitcoin mining, the United States is poised to begin taxing the venture as property. While crypto markets are extremely volatile and open twenty-four seven, many people are willing to hedge their bets or “buy the dip” to make a profit. In March of 2020, the price of Bitcoin was hovering in the low $7,000’s. Today it is worth nearly $60,000, and changing every day. If crypto is taxed as income, what happens to digital assets when a married couple chooses to divorce? Is cryptocurrency considered marital property in Florida? What happens if cryptocurrency was purchased with joint funds during the marriage without one party’s knowledge or consent? And what if the other spouse has been mining Bitcoin? How can Florida courts equitably divide cryptocurrency?
How Does Someone “Mine” for Cryptocurrency?
Mining for cryptocurrency requires a computer to solve blockchains. Users are rewarded monetarily for solving blockchains. Cryptocurrency is unique because it lacks a centralized banking system. Theoretically, one spouse could be “mining” for cryptocurrency without the knowledge of another spouse. They would only need a computer with a video card in order to mine, although profits would not be substantial. Mining does not cost the end-user money to do on an ongoing basis, only start-up costs and the cost of electricity to run the hardware. It is not the same as purchasing a digital asset on a platform like Coinbase. If cryptocurrency was mined or purchased during the marriage, is it marital property? If it is marital property, how would it be valued if the price is constantly subject to fluctuation?
Dividing Cryptocurrency in Divorce
This is a novel topic that has not been addressed at length in case law. Some courts in non-binding jurisdictions have indicated cryptocurrency is a marital asset if there is proof it was acquired during the marriage using marital assets. The only exceptions would be if cryptocurrency was gifted to one spouse specifically from a third party in writing, or if assets were purchased or mined prior to the marriage. Otherwise, cryptocurrency should be considered a financial asset similar to stocks or mutual funds. The problem with cryptocurrency is obtaining a value so it can be divided evenly. Theoretically one could watch the markets to determine the right time to sell, but this might not be a feasible option for parties seeking to finalize a divorce as soon as possible. The most practical solution would simply be to decide between the parties the date and time for selling the assets, then dividing the profits evenly. Cryptocurrency can be converted to the U.S. Dollar rate or held in a vault until the parties are ready to cash it in.
Call our Orlando Divorce Attorneys at Donna Hung Law Group
If you think it is possible your spouse has been mining cryptocurrency or that marital funds were used to purchase cryptocurrency without your consent, it is crucial that you speak with an experienced family law attorney as soon as possible. Similarly, you may need assistance if you are concerned your spouse might be selling or spending shared assets without your knowledge. Our Orlando divorce attorneys at Donna Hung Law Group can help you identify strategies for resolving your divorce as soon as possible. Often property division is contentious, but we work with our clients to determine the solution that works best for them. Because there may be tax implications to selling cryptocurrency, it is crucial you speak to an attorney before proceeding further.