More Australians are investing in cryptocurrency. These assets now appear in separation disputes as volatile, anonymous, and often hidden. Bitcoin hoards stored in cold wallets and unexplained digital transfers are becoming common. Crypto is now a wildcard in family law. Courts have started paying attention to how cryptocurrency is used and disclosed in property settlement disputes.
Whether you’re the one holding the private keys or trying to find out where they’re buried, this article explores how crypto is reshaping property settlements. We also delve into why it’s no longer just for tech bros and Twitter threads, it’s family law’s newest frontier.
The rapid growth of cryptocurrencies has introduced a new, decentralised asset class into the financial mainstream. Millions of Australians now own digital currencies like Bitcoin and Ethereum. These currencies, once seen as experimental, now increasingly feature in property settlement disputes following relationship breakdowns.
As crypto-assets grow in popularity, their treatment under the Family Law Act 1975 (Cth) has become important. Identifying, valuing, and dividing these assets presents challenges. Their digital nature often makes them difficult to trace and assess in family law proceedings.
What Are Crypto‑Assets?
Cryptocurrencies are intangible digital assets that operate on blockchain technology. They are decentralised (not issued by governments or banks), rely on encrypted ledger systems, and often have limited supply, for example, Bitcoin is capped at 21 million coins globally.
While Bitcoin is the most widely recognised, thousands of other coins exist, including Ethereum, Solana, and Litecoin, each with their own use cases, platforms, and market values.
These assets are:
- Intangible (no physical form)
- Borderless (can be transferred worldwide instantly)
- Potentially anonymous, depending on how they’re held
This combination of traits makes them both attractive to investors and challenging to deal with in family law contexts.
Cryptocurrency in Family Law: How Courts Treat Digital Assets
The Family Law Act does not specifically mention cryptocurrency due to its age. However, courts treat cryptocurrencies as property. This applies when dividing assets between parties in family law proceedings.
In Powell v Christensen [2020] FamCA 944, the Court included cryptocurrency assets held solely by the husband in the property pool, despite limited financial disclosure. Due to insufficient current valuation data, the Court relied on the purchase value as the best available evidence for division. This reflects the Court’s willingness to deal with digital assets even when transparency is lacking.
This aligns with broader principles: if an asset can be valued and realised, it can be divided. That applies to cryptocurrency in the same way it does to cash, shares, or real estate.
Disclosure Challenges of Cryptocurrency in Family Law Matters
Under family law, parties are under a strict obligation to provide full and frank disclosure of all financial resources. However, cryptocurrency creates new challenges:
- Anonymity: Crypto wallets do not carry names. If assets are held in “cold wallets” (offline), there may be no third-party institution to subpoena.
- Difficulty tracing: Many crypto purchases are made using traditional bank accounts or credit cards, but others may originate through peer-to-peer transactions or foreign exchanges with limited regulation.
- No central authority: Unlike bank accounts, there is no single governing body overseeing crypto ownership.
Despite this, disclosure is still required, and Australian courts are becoming more proactive in ensuring that parties comply. Evidence such as bank statements, exchange history, wallet addresses, and transaction logs can be sought and examined.
Valuing Cryptocurrency in Settlements
Another complication is the volatility of crypto markets. Bitcoin, for example, has seen daily swings in value of more than 10% and long-term fluctuations ranging from $10,000 to $90,000 AUD within a single year.
Because of this, the question of when to value the crypto becomes significant. Courts may use:
- The value at the date of trial, or
- The value at the date of separation, depending on context
In some matters, parties may agree (or be ordered) to liquidate the crypto into cash before final orders are made. This helps to avoid market risk, but may trigger capital gains tax (CGT) implications, which also need to be factored into the final property division.
Practical Tips for Dealing with Cryptocurrency in Family Law
When dealing with cryptocurrency in family law matters, parties can take several practical steps to ensure a fair and transparent outcome. First and foremost, they should request full disclosure. Each party must declare all digital wallets and holdings. The reviewing party should then examine supporting documents such as exchange statements, bank transactions, and tax records.In situations where cooperation is limited, subpoenas can be used creatively. While crypto wallets themselves can’t be subpoenaed, banks and cryptocurrency exchanges often can, and may provide records linking parties to specific transactions or accounts.
In more complex cases, it may be necessary to engage forensic experts with experience in tracing digital assets. These professionals can help identify hidden transactions or wallets and provide evidence for the court. It’s also important to agree on a valuation date early in the process. Given the volatility of crypto markets, fixing a date can help avoid disputes and ensure a more accurate and equitable division of assets. Lastly, parties should remain aware of potential tax consequences. Selling or transferring cryptocurrency can trigger capital gains tax (CGT) liabilities, which should be factored into any settlement discussions or orders.
The Bigger Picture: Australia’s Crypto Ownership Is Surging
Australia is now among the top 10 countries globally for cryptocurrency adoption. Reports suggest up to 25% of Australians hold or have held digital currency. By 2030, digital assets are projected to contribute $60 billion annually to Australia’s economy.
As these numbers rise, crypto will continue to appear more frequently in family law matters making it crucial for lawyers and clients alike to understand how it works.
Conclusion
Cryptocurrency has introduced new complexity to family law, but also new opportunities for parties and practitioners to engage with modern forms of wealth. With the right expertise and due diligence, these digital assets can be handled just like any other financial resource.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
