Yes, your spouse could attempt to hide cryptocurrency assets during a NSW property settlement, but doing so carries significant risk. The Family Law Act gives the court broad powers to set aside a property settlement where one party has not been fully transparent with their assets, however proving concealment can be challenging.
What is considered a crypto asset?
A crypto asset is treated like any other asset in a property settlement. This means it is subject to the same rules regarding disclosure and division. The courts will look at how you acquired and used the crypto asset to determine its characterisation – whether it’s considered personal use or an investment.
How do courts determine if crypto is personal use or investment?
The main use of the crypto asset at the time of disposal is key. If you acquired cryptocurrency and quickly used it to buy personal items, it’s more likely to be considered a personal use asset. However, if you held it for a period of time, or only used a small portion for personal spending, it’s more likely to be treated as an investment. During a period of ownership, the way you keep or use a crypto asset may change, and it is the main use at disposal that dictates its characterisation.
What records should I keep?
Keeping detailed records is essential. You should retain receipts for all crypto transactions, the date of each transaction, what it was for, the other party’s crypto address, the value in Australian dollars at the time, and any associated costs like agent or software fees. It’s also important to regularly export your transaction history – at least every three months – and before closing any accounts. You need to keep details for each crypto asset as they are separate CGT assets, and records should be kept for 5 years from the later of its disposal or acquisition for less than $10,000.
The concealment risk
Cryptocurrency’s decentralized nature can make it tempting to conceal. However, blockchain technology is inherently transparent. While hiding the *location* of crypto might be possible, completely concealing its existence is very difficult. Courts are increasingly sophisticated in tracing crypto assets, and deliberate non-disclosure can have serious consequences, including penalties and a less favourable property settlement outcome. The Family Court can also make orders requiring a party to provide further information or documents.
Questions to consider
- What steps can I take *now* to gather comprehensive records of all crypto holdings, even those I believe my spouse may not be aware of?
- If I suspect my spouse is not being truthful about their crypto assets, what evidence would be most helpful to bring to a lawyer?
- How will the value of cryptocurrency be determined for the purposes of a property settlement, given its volatility?
This information is general in nature and does not constitute legal
advice. For advice specific to your situation, contact JB Solicitors.