Types of Cryptocurrency and How It Plays a Role in a Divorce Settlement
In recent years, cryptocurrency has become a growing concern in New Jersey divorces. Because digital assets can be difficult to trace and fluctuate in value, they add unique challenges to equitable distribution.
Connect with a Somerset County family lawyer if your marital assets include digital assets like cryptocurrency. Understanding different types of cryptocurrency and how they factor into divorce proceedings is essential for achieving a fair settlement.
Common Types of Cryptocurrency
While most people are familiar with Bitcoin, there are thousands of cryptocurrencies in circulation. Some of the most common include:
- Bitcoin (BTC). The original and most widely recognized cryptocurrency. Its value often drives the overall crypto market.
- Ethereum (ETH). Known for its smart contract capabilities, Ethereum is one of the most actively used cryptocurrencies.
- Stablecoins (e.g., USDT, USDC). These are tied to traditional currencies like the U.S. dollar, making them less volatile.
- Altcoins (e.g., Litecoin, Ripple, Cardano). Coins that offer alternatives to Bitcoin and often feature unique technological functions.
- Tokens and NFTs. Digital tokens and non-fungible tokens represent ownership of assets, such as art or collectibles, and can hold significant financial value.
Each type of crypto may be stored in different ways (on exchanges, in digital wallets, or even offline) making discovery and valuation a critical part of the divorce process.
New Jersey is an equitable distribution state, which means assets acquired during the marriage are divided fairly, though not always equally. Cryptocurrency is treated like any other marital asset, but it presents some distinct challenges.
For one, there can be identification and disclosure issues. Spouses must fully disclose their financial holdings. But crypto can be stored anonymously, so one spouse may attempt to hide digital assets. Uncovering these holdings may require subpoenas, careful review of bank records, or the assistance of forensic experts.
Also, unlike traditional investments, cryptocurrency values can change dramatically from one day to the next. Courts often rely on the market value at a specific date, such as the filing date or the date of distribution. Choosing the right valuation point is essential to ensure fairness.
Transfers and Future Considerations
Some cryptocurrencies can be transferred relatively easily between digital wallets, others may require liquidation into cash before division. Tax implications also come into play, since selling cryptocurrency may trigger capital gains. A settlement that includes crypto should account for its potential to significantly gain or lose value in the future, too. Legal professionals know how to ensure full disclosure of cryptocurrency holdings and structure a fair division that accounts for taxes and market volatility.
Cryptocurrency is no longer a fringe issue, it is a real and often significant part of modern divorce settlements. Working with a Somerset County family lawyer is the best way to make sure these holdings are properly addressed.
Is crypto part of your marital wealth? Speak with the attorneys at Law Offices of Kisha M. Hebbon, LLC to be sure you access a fair financial settlement if you are divorcing in New Brunswick, North Brunswick, Piscataway, Edison, Somerset County, or Middlesex County. Contact us to schedule a confidential consultation.
