Proving your spouse owns cryptocurrency requires demonstrating its existence and value as an asset in a property settlement. The key challenge is that cryptocurrency isn’t always readily visible like a house or a bank account, and tracing it can be complex.
What records are important?
For record keeping purposes, evidence of your original intention at the time you acquired the crypto asset may be relevant, but it doesn’t determine whether your crypto asset is a personal use asset. Instead, you will need to demonstrate how you actually kept or used the crypto asset from the time of acquisition up until the time you disposed of it. Regularly exporting your transaction history is crucial – aim for at least every three months, and always before closing an account.
Can I get information directly from exchanges?
The Family Law Act gives individuals the right to access information held by credit reporting bodies and reporting entities, including those relating to cryptocurrency. Under section 35G, you can request access to personal information or other relevant data held by these entities to verify your spouse’s cryptocurrency holdings. However, this relies on the entity being able to provide that information.
What about identifying information?
Reporting entities are required to verify customer identities before providing designated services, as outlined in the simplified outline in section 27. While there are modified procedures for pre-commencement and low-risk customers, ongoing customer due diligence is still required. This means exchanges should have records of identity verification, which may be relevant to establishing ownership.
The tracing problem
Even with access to exchange records, tracing cryptocurrency can be difficult. Wallets can be anonymous, and funds can be moved between exchanges and wallets easily. Recreating lost records may require using a blockchain explorer or contacting the exchange’s customer service, but success isn’t guaranteed. You should keep records for 5 years from the later of when you acquired or disposed of the asset.
Questions to consider
- What steps can I take now to gather evidence of my spouse’s cryptocurrency activity, even if I don’t have direct access to their accounts?
- If my spouse claims they no longer have the cryptocurrency, what evidence would be needed to challenge that claim?
- How will the value of the cryptocurrency be determined for the purposes of the property settlement?
This information is general in nature and does not constitute legal
advice. For advice specific to your situation, contact JB Solicitors.