Authored by Robert Webster, a leading senior associate at Maguire Family Law
Webster: Cryptocurrency is now commonplace in family law matters
The prevalence of digital currencies, like Bitcoin, is increasingly evident in divorce settlements, particularly those involving significant assets. This rise in cryptocurrency use is presenting challenges for legal professionals as legal frameworks attempt to keep pace.
Family law experts are navigating the complexities of digital wealth disputes, balancing the limitations of current practices with the expectations of their clientele. They are forging ahead with strategies to handle assets that are often difficult to locate and subject to wild market fluctuations.
While deep knowledge of blockchain technology isn’t essential, a firm understanding of how cryptocurrency impacts financial resolution proceedings is now a necessity.
The Growing Concern of Hidden Crypto Holdings
In recent years, digital assets have become a common element in the division of marital property during divorce proceedings. The decentralized and confidential nature of cryptocurrencies makes them more challenging to uncover and assess compared to standard assets.
Family lawyers are increasingly faced with situations where clients suspect their former spouse of transferring funds into crypto or converting cash into digital tokens to conceal their true financial standing. Discovering these assets can be considerably more difficult than tracing conventional investments, necessitating thorough investigative efforts.
Disclosure Shortcomings and Ambiguities in the Law
Proper disclosure of assets remains a significant obstacle. The standard financial disclosure document, known as Form E, doesn’t explicitly address digital assets, creating opportunities for unintentional oversights or intentional acts of concealment.
The notable case of Culligan v Culligan [2025] EWFC 1 underscores the increasing significance of cryptocurrency in high-value divorce situations. The court addressed a Bitcoin fortune valued at £20 million, which was originally purchased for only £10,000. In addition, undeclared crypto assets totaling £371,000 were uncovered during the legal proceedings.
This case emphasizes the potentially significant legal and financial repercussions of failing to disclose crypto holdings. Family lawyers need to proactively identify and address digital assets during the disclosure process.
Despite the court’s expectation of complete and transparent disclosure, the reality is often intricate and resource-intensive. Any lack of understanding regarding digital assets can generate uncertainty for professionals advising their clients and negotiating settlements.
Valuation, Tracing, and Global Complications
Once digital assets have been disclosed, tracing them is manageable, provided that records are comprehensive. However, the task becomes more complex when assets are dispersed across multiple exchanges and storage methods, or held in different countries.
Valuation adds another layer of complexity, as the volatility of cryptocurrency markets can cause significant value fluctuations during the proceedings. Fluctuations as large as 30% from preparation of asset schedule to the hearing day are observed, influencing proposed settlements.
The courts recognize this issue and sometimes establish a fixed valuation date, employ average pricing methods, or implement lump-sum adjustments to account for these fluctuations.
International holdings introduce further difficulties, particularly when other legal jurisdictions are slow to cooperate with disclosure or enforcement orders.
Given these challenges, there’s a growing reliance on forensic accountants and digital asset specialists. These professionals offer valuable assistance in identifying undeclared holdings, analyzing blockchain activity, and providing expert testimony to the court, frequently as a single joint expert.
However, if digital wealth has been deliberately hidden or secured in a way that obstructs access, tracing efforts may ultimately prove unsuccessful. Managing client expectations regarding these limitations is as crucial as actively pursuing investigative avenues.
The Imperative for Legal Updates
The Law Commission released its final report on digital assets in June 2023, recommending that legislation should formally acknowledge a ‘third category’ of personal property. This category would encompass assets like crypto-tokens, which don’t easily fit into the traditional classifications of ‘tangible possessions’ or ‘intangible rights’.
The Commission emphasized the importance of adaptability, allowing courts the flexibility to apply and expand this category as new types of digital assets emerge. Consequently, the proposed Property (Digital Assets etc) Bill will formally recognize crypto as a specific type of property.
This development is significant for family lawyers, as it confirms that digital assets are subject to disclosure, valuation, and enforcement orders, similar to traditional property.
Once enacted, the legislation will provide a more stable framework and could lead to updates in standard disclosure forms. This will ensure that cryptocurrency and other digital assets are properly identified and consistently addressed in financial remedy proceedings.
Furthermore, providing supplementary training to solicitors, barristers, and judges would be extremely beneficial, considering the increasing prevalence of cryptocurrency in divorce cases.
All family law professionals must have the necessary knowledge to make well-informed decisions in complex cases involving digital assets. Beyond domestic legal updates, improved mechanisms for international cooperation will likely be essential as digital wealth transcends geographical limitations.
The message for family lawyers is unambiguous: cryptocurrency is no longer a niche area. Those who gain proficiency in handling these assets will be well-positioned to effectively guide clients through the evolving landscape of financial remedy disputes.
While the legal system is adapting, practitioners can mitigate risk by asking the right questions early, identifying potential warning signs, and seeking specialized expertise when necessary.