Your cryptocurrency assets are considered property in a NSW property settlement, meaning they are subject to division between you and your former partner. The key complication is accurately identifying and valuing these assets, as they exist outside of traditional banking systems.
What is considered a crypto asset?
A crypto asset includes not just Bitcoin, but any digital currency or token. This extends to situations where you’ve exchanged crypto for goods or services, used it to acquire gift cards, or topped up a prepaid debit card with it. Even using a payment gateway like PayPal or Apple Pay with crypto counts as utilising the asset.
How are crypto assets treated in a property settlement?
Like any other asset – a house, shares, or superannuation – crypto assets are included in the pool of assets to be divided. The court doesn’t automatically assume an equal division, but that is often the starting point for negotiations. The specific outcome will depend on your contributions, future needs, and other relevant factors.
What records do I need to keep?
Maintaining thorough records is crucial. You should regularly export your transaction history – at least every three months – and always before closing an account. Consider using an Australian crypto tax calculator to help sync your exchange and wallet accounts. If you’ve lost records, you can try a blockchain explorer or contact the exchange’s customer service. You must keep these records for 5 years from the later of when you disposed of the asset or moved it out of Australia under section 56.
The valuation problem
Determining the value of cryptocurrency can be challenging due to its volatility. The value at the time of separation is generally used, but establishing that value can be complex. It’s not always straightforward to prove the value of a wallet on a specific date, and disagreements about valuation are common. The courts have not provided definitive guidance on how to resolve these disputes.
Questions to consider
- What steps have I taken to document my crypto holdings and transactions since acquiring them?
- If my former partner is unaware of my crypto assets, what are the risks of non-disclosure?
- How will the potential volatility of crypto assets impact the fairness of a property settlement?
This information is general in nature and does not constitute legal
advice. For advice specific to your situation, contact JB Solicitors.