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Dividing cryptocurrency during divorce

On Behalf of | Jun 16, 2022 | Divorce

Texas is one of nine states that still has community property laws. That means that in a divorce, you and your spouse need to divide your assets equally (not equitably). If you are the primary breadwinner or have put more money into your relationship, that can be frustrating, since you have more to lose.

In particular, if you’ve been investing in cryptocurrency, you may be in a position where you could lose much of what you’d put into the system. Fortunately, depending on the value of the currency at the time of your divorce, you may be able to minimize how much you need to divide.

It’s complicated to divide cryptocurrencies

The first thing you should know about dividing crypto is that it’s hard to do so. It’s not tracked like normal transactions, and you may have to have a special wallet or application to access it at all.

Unlike some other, more traditional investments, it could be more complicated to divide your crypto, since your spouse will need to have the tools needed to accept this currency. The volatility of cryptocurrencies adds another layer of difficulty to the division.

Cryptocurrency volatility can make division difficult

Cryptocurrencies can be volatile, which means that they could be worth a lot at the time of an appraisal and not much at all by the time your divorce is over. If you plan to divide cryptocurrencies, you will need to consider a volatility computation of some kind.

For example, you may agree that your spouse is entitled to half of the currency or its value, but what if that value skyrockets or plunges? You will need to think through how to address that volatility.

Sometimes, avoiding the division of crypto is a good idea

While crypto has the potential to grow, it’s not always easy to predict. If this is something you collect yourself, your spouse may not be interested in the currency but instead be willing to divide assets based on the value of that currency at the time of your separation. For instance, if it was worth $50,000 and you wanted to keep it at that time, they might accept $50,000 of other assets.

This is a complex situation, but with good accounting and legal help, you’ll be able to figure out a reasonable solution.