Cryptocurrency in Divorce Settlements (Australia – Updated)
In a family law property settlement, the first step is to identify and value the asset pool. This process relies on each party disclosing their assets and liabilities to the other party. Under the Family Law Act 1975 (Cth) and associated court rules, spouses have a strict duty of full and frank disclosure of their financial circumstances throughout the proceedings.
However, this obligation is not always honoured. Solicitors frequently act for parties who suspect that their former spouse is concealing assets. In recent years, cryptocurrency has increasingly been used as a method to obscure wealth, replacing more traditional strategies such as offshore bank accounts.
While cryptocurrencies can provide a degree of anonymity, the legal system is gradually adapting. Courts now recognise that digital assets must be disclosed just like any other property, and failure to disclose them can lead to serious consequences including adverse cost orders, penalties, or the reopening of property settlements.
If a party has taken even basic steps to conceal cryptocurrency holdings, such as transferring assets through multiple wallets or storing them in cold (hardware) wallets, detecting those assets can be difficult. However, forensic accountants and digital asset investigators are increasingly able to trace blockchain transactions and identify patterns linking wallets to individuals.
In cases where cryptocurrency has been purchased through exchanges linked to bank accounts or credit cards, records can often be obtained. Where assets were acquired through peer-to-peer transactions, offshore exchanges, or decentralised platforms, investigators may instead need to trace the underlying funds used to purchase the cryptoassets. This process can be complex and costly.
What is Cryptocurrency?
Cryptocurrency is a digital or virtual asset that uses cryptography to secure transactions and control the creation of new units. Most cryptocurrencies operate on blockchain technology.
Unlike traditional currencies, cryptocurrencies are generally not issued or controlled by governments or central banks.
The most widely known cryptocurrency is Bitcoin, but there are thousands of other digital assets, including:
- Ethereum
- Litecoin
- Ripple (XRP)
- Solana
- Stablecoins such as USDT or USDC
These assets may function as investment assets, payment mechanisms, or tokens within decentralised finance (DeFi) systems.
Is Cryptocurrency Legal in Australia?
Cryptocurrency is legal to own and trade in Australia.
Australia has taken a relatively progressive approach to regulating digital assets. Key regulatory developments include:
- AUSTRAC regulation of digital currency exchanges under anti-money laundering and counter-terrorism financing laws.
- Cryptocurrency being treated as property for legal purposes.
- The Australian Taxation Office (ATO) treating cryptocurrency as a capital gains tax (CGT) asset.
This means that selling, trading, or converting cryptocurrency may trigger capital gains or losses, which must be declared for tax purposes.
Although cryptocurrencies have been associated with criminal activity such as money laundering and fraud, the mere ownership of cryptocurrency is lawful.
Many Australians hold digital assets as investments or for participation in blockchain-based financial systems.
Valuing Cryptocurrency for a Divorce Settlement
Cryptocurrency can generally be converted into Australian dollars through exchanges, meaning it has a measurable market value.
However, digital assets are notoriously volatile. Prices can fluctuate dramatically over short periods of time, which complicates the valuation process in property settlements.
Courts may adopt several approaches when dealing with cryptocurrency assets, including:
- Valuing the asset at a specific date, such as the date of hearing or settlement.
- Requiring liquidation of cryptocurrency so the proceeds can be added to the asset pool.
- Allocating the crypto asset to one party, with adjustments made to other property to reflect the value.
In some cases, parties may agree to share the asset itself rather than convert it to cash, although this can introduce ongoing volatility risks.
Because of these challenges, expert evidence from forensic accountants or crypto-asset specialists may be required.
Gathering Evidence of Cryptocurrency in Family Law Proceedings
If a person believes their spouse or former partner owns cryptocurrency that has not been disclosed, it is important to gather available evidence.
Potential sources of evidence include:
- Bank and financial records
Statements showing transfers to cryptocurrency exchanges or payment platforms can indicate purchases of digital assets.
- Exchange records
Major exchanges operating in Australia must comply with AUSTRAC identification requirements, meaning transaction records may link accounts to individuals. - Digital wallets
Cryptocurrency is stored in wallets such as Apple Pay, Google Pay, PayPal, WeChat Pay etc, which may be online accounts, mobile apps, desktop software, or physical hardware devices. Wallets have unique addresses that can be traced on public blockchains. - Email confirmations and transaction histories
Most exchanges generate email confirmations containing timestamps, transaction amounts, and exchange rates. - Blockchain analysis
Specialist investigators can analyse public blockchain data to track transfers between wallets and identify patterns suggesting control by a particular individual.
Courts can order the production of documents and information during the disclosure and discovery process, including exchange records, wallet details, and private keys if necessary.
The Growing Impact of Cryptocurrency on Family Law
As cryptocurrency ownership becomes more widespread in Australia, family law property settlements are becoming more complex.
Legal practitioners are increasingly working alongside forensic accountants, digital asset tracing specialists, and blockchain analysts to ensure that hidden assets are identified and valued properly.
Courts have also demonstrated a willingness to take non-disclosure of cryptocurrency very seriously, recognising that digital assets form part of the matrimonial asset pool just like shares, real estate, or bank accounts.
As regulatory frameworks continue to evolve and blockchain analysis tools become more sophisticated, it is likely that concealing cryptocurrency in family law proceedings will become progressively more difficult.
