Bitcoin has become a buzzword recently, more well-known to some than others, but unless you live under a rock that does not get WiFi, you have surely at the very least heard the term tossed around. For those less informed on the emerging value system, Bitcoin is a digital currency used as a peer-to-peer payment system. Developed in 2009, bitcoins can be exchanged for goods, services and other currencies. While bitcoins have been under fire for their use in illegal activities (e.g. the recently exposed online black market Silk Road), they have legitimate uses as well, making the debate over this new cryptocurrency a hot-button topic.
Because Bitcoin is new, there is not a lot of legal precedent to go on, and yet the existence of the currency will surely impact many legal issues in the future. One of these issues is certain to be divorce, and the addition of bitcoin as a form of currency is providing a new complication. In a recent article on CoinDesk, this topic was approached using a query posted in a Bitcoin Talk Forum.
A user in the forum posed a hypothetical question regarding a man who, prior to divorcing his wife, moved a significant portion of his assets into bitcoins. Can the court access this digital currency?
Because bitcoin is a fairly new phenomenon, there is not a lot of precedent for this type of quandary. Are divorcing spouses legally obligated to declare the contents of their bitcoin wallet? Yes, when divulging assets in divorce proceedings you are expected to divulge all of your assets.
Ultimately, bitcoins do present a way to deceitfully hide assets, but this is nothing new. Whether money is hidden in a mattress or in bitcoin, this is not new behavior. Yet, bank records may often show the money being transferred, and at this point, if the exchange happened in the US, it will be traced back. Unfortunately, with bitcoins, funds can be easily and quickly transferred overseas, which poses additional legal issues that will have to be further addressed.
The lesson is, while technology is changing, the end result and consequences will be the same. One should always disclose assets truthfully in a divorce to avoid additional legal complications. And, as bitcoins continue to be circulated, they will surely play an increasing role in a variety of legal concerns prompting further discussion.