The rising use of cryptocurrency is adding new complications to divorce cases, as individuals use these assets to avoid disclosing their true wealth. Although courts have ways to uncover hidden digital holdings, the cost and difficulty involved in tracing crypto transactions makes many lawyers question if it is worth pursuing. This is particularly true when assets are hidden using privacy-focused tools.
Divorce rates have returned to levels seen before the pandemic, yet around 100,000 Australians still separate each year. About four in 10 marriages end, with the average duration being 13 years. As people increasingly marry in their 30s and separate later in life, dividing accumulated assets fairly has become more difficult, especially when one party uses crypto to hide financial details.
The transition from tangible property to decentralised finance poses a challenge for legal professionals. They must now follow a trail through digital wallets, offshore exchanges and platforms that lack traditional authentication systems. While courts can order access to devices and transaction histories, the process is often time-consuming and costly. Hidden crypto assets can range from small amounts to multi-million-dollar holdings, depending on when the investments were made.
This issue is particularly common among younger couples, who may choose digital investments like Bitcoin or other altcoins over more traditional real estate. In some cases, crypto assets remain undisclosed even after one partner passes away, which can lead to those holdings being lost entirely.
The Family Law Act requires full disclosure of financial assets during separation. However, despite these legal obligations and potential penalties, crypto remains a common tool for financial dishonesty. Whether or not to pursue hidden crypto holdings during a divorce depends on whether the cost and effort are justified by the suspected value.
Unequal financial knowledge in relationships is not always due to deception. Sometimes one partner is simply less involved in financial decisions. Experts agree that both spouses should try to understand their shared financial situation. Open communication, asking questions and learning from trusted financial sources can reduce the risk of being unaware of major assets later on.
As cryptocurrency use becomes more widespread, legal professionals expect these cases to become more frequent. The challenge of tracing digital assets is likely to become a regular aspect of Australian family law.
