Yes, you absolutely must disclose all cryptocurrency holdings in a NSW property settlement. Failure to do so is considered a failure to provide full and frank disclosure, which can have serious consequences. The court expects complete transparency regarding all assets, and this now definitively includes digital assets like cryptocurrency.
What is considered a financial resource?
Cryptocurrency is treated as a financial resource for the purposes of property settlement. This means its value will be considered alongside other assets like property, superannuation, and bank accounts when determining a fair outcome. The value at the time of settlement is crucial, and accurate records are essential to establish this.
What records do I need to keep?
Maintaining detailed records of your cryptocurrency transactions is vital. You should keep records of 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. Digital wallet records and keys are also important to retain, as they demonstrate ownership and control.
What if I acquired crypto through DeFi?
If you’ve earned cryptocurrency through Decentralised Finance (DeFi) platforms – for example, through staking or yield farming – this is considered assessable income. The market value of any crypto asset received as a reward must be reported at the time of receipt. Similarly, if you receive new crypto as a result of a chain split, you need to work out any capital gain, noting the cost base of the new asset is zero.
The valuation problem
Determining the value of cryptocurrency can be complex. Unlike a house or a bank account, the value fluctuates constantly. Establishing the value at a specific point in time – often the date of separation – requires careful consideration and potentially expert evidence. The court does not have a preferred method for valuation, and disagreements are common.
Questions to consider
- What evidence do I have to prove the value of my cryptocurrency at the relevant dates (separation, settlement)?
- If I’ve used multiple exchanges or wallets, how can I consolidate all the transaction data into a clear and understandable format?
- Could my spouse allege I’ve deliberately undervalued or concealed cryptocurrency holdings, and what steps can I take to prevent this?
This information is general in nature and does not constitute legal
advice. For advice specific to your situation, contact JB Solicitors.