As technology evolves, so does the way we manage, invest and store our wealth. An increasing number of divorcing couples in the UK are finding that digital assets, such as cryptocurrency and non-fungible tokens (NFTs), form part of the financial picture. But how do the courts treat these relatively new and complex assets during divorce proceedings?
In this article, we look at the challenges, legal principles and practical steps to consider when digital wealth is in question.
What Are Digital Assets?
Digital assets are items of value that exist electronically. In regard to divorce, the most common examples include:
- Cryptocurrency – Bitcoin, Ethereum and other tokens stored in digital wallets.
- NFTs (Non-Fungible Tokens) – unique digital items (often linked to art, music, or collectibles) secured by blockchain technology.
- Other online assets – such as digital shares, domain names, or even monetised social media accounts.
The increase in popularity of these assets means family courts must deal with property that can be extremely volatile, easily hidden and difficult to value.
Are Crypto and NFTs Treated Like Other Assets in Divorce?
Simply put, yes. In England and Wales all assets, whether traditional (like property or pensions) or modern (like crypto) can form part of the “matrimonial pot” to be divided fairly on divorce. The key sharing principle remains together with factors of need and in some cases compensation.
However, digital assets present some unique challenges:
- Volatility – crypto values can fluctuate wildly within days, making accurate valuations tricky.
- Transparency – unlike bank accounts, crypto wallets can be harder to trace, especially if one party is reluctant to disclose them.
- Regulation – crypto is still lightly regulated, which can make enforcement and recovery difficult.
Fact: Statistics from the Ministry of Justice revealed that in 2023, the number of financial remedy orders that were contested jumped to 10,300, representing a 66% increase on the previous year.
How Do Courts Value Digital Assets?
Courts typically rely on expert evidence to assess the value of cryptocurrency or NFTs at a specific date. This may involve:
- Obtaining transaction histories from exchanges or wallets.
- Using forensic accountants or digital asset specialists.
- Considering recent sale prices for NFTs, if available.
Because prices can fluctuate, valuations may need to be updated throughout the divorce process to ensure a fair outcome at the point of settlement.
Hiding Crypto in Divorce Proceedings
There have been cases where one partner has attempted to conceal wealth by transferring funds into crypto wallets or NFTs. However, the duty of full and frank disclosure applies equally to digital assets.
If one party is found to have hidden crypto holdings, the court has wide powers to:
- Set aside unfair settlements.
- Award a greater share of other assets to the honest spouse.
- Impose costs penalties for non-disclosure.
Specialist tracing can often uncover attempts to hide digital assets, so being transparent is always the best approach.
Did you know: according to a recent Financial Times article, 1 in 4 individuals admitted to hiding assets during divorce proceedings, through methods including cryptocurrency.
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Practical Steps for Divorcing Couples
If digital assets are part of your marital estate, here are some important steps to consider:
- Identify and disclose – ensure you both declare any crypto holdings or NFTs.
- Obtain valuations – seek expert input to establish accurate and up-to-date values.
- Consider volatility – factor in price changes when negotiating settlements.
- Think about liquidity – selling an NFT or transferring crypto may take time and could have tax implications. We would always recommend seeking financial advice during a divorce.
- Use mediation – where emotions run high, mediation can help couples agree on how to divide complex assets without unnecessarily drawing out the legal process.
Mediation and Digital Assets
Mediation is particularly useful when digital assets are involved. It allows both parties to have open conversations about ownership, value and division without immediately resorting to court. This can save time, legal costs, and reduce stress while still ensuring full financial disclosure.
Conclusion
Increasing ownership of digital assets means they are no longer niche investments and are becoming a common feature in divorce cases. The law treats them like any other asset, but their volatility and relative complexity require careful handling. Whether you or your spouse hold cryptocurrency, NFTs, or other online investments, it’s important to get expert advice early on.
At Consilia Legal, our specialist family law and mediation team can guide you through the process of dividing digital assets from providing full disclosure to obtaining expert valuations. Our team aim to ensure you achieve cost effective and pragmatic solutions.
Call us on 0113 322 9222 or email enquiries@consilialegdev.wpenginepowered.com to arrange a free consultation.
