April 13th, 2018
When a marriage or civil partnership breaks down, legal proceedings to divide the finances usually follow. The parties to the marriage or civil partnership have a duty to disclose their assets to their former spouse and to the Court. The Court͛s duty, then, is to make an Order such to achieve fairness and also ͚to give each party an equal start on the road to independent living’. 
The advent of cryptocurrencies has recently added a new dimension where concerns the division of matrimonial assets. These are a form of digital currency which do not exist in a physical form but exist on the ͚block-chain͛ (a shared public database) and are bought and sold via a peer-to-peer network – between two users with equal privileges – without the need for a bank or other central authority. Consequently, as transactions take place over the Internet with only the use of a wallet identification number and without names, there is an element of anonymity.
Cryptocurrencies have been prolific in the news recently, with their value increasing exponentially in the last few years. To take an example, Bitcoin, accepted as the world͛s first decentralised cryptocurrency, increased in value from £8.83 for one Bitcoin, as of the 8th January 2009, to £19,174.39 as of the 16th December 2017. Furthermore, there is no tax arising upon sale of any Bitcoin, however, depending upon the vendor, there can be significant transaction fees. With such an extreme increase in value and the enticing lack of tax payable, it is easy to see why people are using it as an investment and why, therefore, Courts and legal professionals must begin to consider it in terms of financial division upon divorce.
As cryptocurrencies are a new and evolving asset, the question as to how these currencies should be treated in Court has yet to be addressed in the UK. It is possible that they could be treated similarly to shares with the value of the cryptocurrency, as at the current date, being obtained and added to the matrimonial ͚pot͛ of assets which could be sold or transferred - with any potential transaction fees being taken into account. However, they could alternatively be treated as illiquid or even intangible assets, as one judge in a US case ruled.
Further issues may arise in financial proceedings where cryptocurrencies are a factor, regarding the duty of disclosure. An area of contention exists in Family Law where parties may attempt to hide assets in the hope that they will not eventually be shared when financial proceedings are entered into. Given the digital nature of cryptocurrencies, they are much more difficult to track and it is particularly problematic to discover whether a person holds money in Bitcoin, for example, as all that exists to identify the holder is a wallet identification number. In this scenario, a spouse may find it difficult to argue that their ex- partner was hiding cryptocurrencies unless they already knew that the person held them. Otherwise, it could be possible to follow the person͛s investment by looking at their bank statements for payments to coin handlers such as Coin Base; then deducing that this money was used to purchase cryptocurrency.
Hiding assets is by no means a consequence-free action. Courts have the power to order the party who is not complying with their duty of disclosure to pay the other party͛s costs, can even, to some degree, guess at the amount of finance that has been hidden. In this way, it is certainly worth co-operating fully and providing complete disclosure at an early stage so as to avoid the costs of drawn-out legal proceedings to discover hidden assets.
Bitcoin and other cryptocurrencies create an exciting and updating area of the law, which legal professionals will need to watch closely. With their only being in existence for around ten years, and the recent hysteria regarding their surge in value, there are bound to be cryptocurrency-related questions going to the Court very soon.
At Hawkins Family Law, we can advise you in relation to financial proceedings following divorce or separation. We fully encourage our clients to comply with the duty of full and frank disclosure and, if our clients hold bitcoin or other cryptocurrencies, we would completely support them in any ensuing proceedings and even, potentially, make legal history.
Miller v Miller; McFarlane v McFarlane  UKHL 24 per Baroness Hale 
HMRC Policy Paper, ‘Revenue and Customs Brief 9 (2014): Bitcoin and other cryptocurrencies’ (3rd March 2014)
Bitcoin Price Chart
Florida v Espinoza, Case Number: F14-2923 22nd July 2016
Family Procedure Rule (FPR) 28.3(6)
Young v Young  EWHC 3637 (Fam)
Having recently graduated with her first class honours degree in law from the University of Bedfordshire, Holly is keen to explore her interest in Family Law. She has previously volunteered with public legal advice services and hopes to eventually qualify as a family Solicitor. Holly joined Hawkins Family Law in August 2017.
Hawkins Family Law fields 'a very professional team that delivers a high-class service and has strength-in-depth from senior to junior level'. Managing director and team head Jo Hawkins provides 'clear and accurate advice and moral support through often testing times for her clients; she focuses on deriving the best long-term outcome for her client and other parties'. The practice has particular strength financial matters, including divorce and ToLATA proceedings. Other key figures include Loraine Davenport, who has strong collaborative law expertise and handles complex children cases and high-net-worth ancillary relief matters; Annabel Hayward, who focuses on complex financial provision and co-habitation matters; and Stacey St Clair.
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What the team is known for
Boutique family law firm that punches above its weight in terms of high-value and complex matrimonial finance instructions relating to business assets, pensions and substantial property portfolios, including assisting with the handling of assets abroad. Also represents clients in the negotiation of wealth protection agreements and private law childcare arrangements. Fields a team trained in collaborative law and alternative dispute resolution.
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