Why Cryptocurrency Is Not "Untouchable" In Divorce Proceedings

With over 6 million Australian adults now holding cryptocurrency, digital assets have become a significant feature of household wealth.

Yet one of the most persistent myths surrounding crypto is that it exists beyond the reach of family law courts.

Many people going through separation believe their Bitcoin or Ethereum holdings are somehow invisible or untouchable in divorce proceedings.

This belief is wrong, and acting on it can carry serious legal consequences.

The Federal Circuit and Family Court of Australia treats cryptocurrency exactly like any other form of property.

Whether you hold Bitcoin, Ethereum, NFTs, or stablecoins on an exchange or in a private wallet, these assets must be disclosed, valued, and considered as part of any property settlement.

If you're wondering whether your spouse can claim your crypto in a divorce, the short answer is yes. Depending on the circumstances, they may be entitled to a share of them.

If you're navigating a separation involving digital assets, speaking with an experienced family lawyer in Sydney early can help you understand your obligations and protect your interests.

How Australian Family Law Treats Cryptocurrency

Australian family law operates under the Family Law Act 1975, which governs the division of property when relationships break down.

While the Act was drafted before cryptocurrency existed, courts have consistently interpreted its provisions to include digital assets within the definition of "property."

Under section 4(1) of the Act, property includes any interests to which parties are entitled.

Courts have confirmed in cases such as Powell v Christensen [2020] FamCA 944 that cryptocurrency is subject to the same disclosure and division rules as any other asset.

The digital nature of these holdings provides no exemption from family law obligations. For more on how digital assets are handled, see our guide to managing cryptocurrency in family law matters.

Is Crypto Considered Marital Property in Australia?

Cryptocurrency acquired during a marriage or de facto relationship is considered relationship property and forms part of the asset pool available for division.

This includes coins and tokens purchased with joint funds, salary, or any money generated during the relationship.

Even cryptocurrency purchased before the relationship may be included, depending on how it was used.

If one spouse owned Bitcoin before the marriage but the asset increased significantly in value during the relationship, or if profits were used to fund family expenses, the court may determine that both parties have an interest in the asset.

Does It Matter Whose Name the Crypto Account Is In?

Family law does not focus on whose name an asset is registered in. Instead, the court looks at ownership, control, and benefit.

If one spouse holds cryptocurrency in their own name but the asset was acquired during the relationship or funded through joint resources, it remains part of the property pool.

This principle applies whether the crypto is held on an Australian exchange like CoinSpot, an international platform like Binance, or in a personal hardware wallet.

Our property settlement lawyers can help you understand how these rules apply to your specific situation.

What Types of Crypto Assets Are Included in a Divorce?

The disclosure and division obligations extend to all forms of cryptocurrency and digital assets, including Bitcoin, Ethereum, altcoins like Solana and Cardano, stablecoins, and non-fungible tokens (NFTs).

The storage method is irrelevant. Whether assets are held in hot wallets, cold wallets stored offline, or exchange accounts, they must be disclosed in full.

This includes wallet addresses, exchange account statements, transaction histories, and current balances. Any staking rewards, airdrops, or DeFi income must also be disclosed.

Do I Have to Disclose My Cryptocurrency in a Divorce?

Yes. Full and frank disclosure of all assets is a fundamental obligation under Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.

This duty is ongoing throughout proceedings and extends to all cryptocurrency holdings, regardless of when they were acquired or their current value.

Proper disclosure requires providing wallet addresses, exchange account statements, transaction histories, and current balances across all platforms and wallets.

What Happens If Crypto Assets Are Hidden or Not Disclosed?

Failing to disclose cryptocurrency holdings carries significant legal consequences.

The court takes a dim view of non-disclosure, regarding it as an attempt to undermine the integrity of the judicial process.

Where a party is found to have failed in their duty of disclosure, several outcomes may follow.

The court may draw an adverse inference, assuming undisclosed assets have a greater value than admitted.

This can result in settlement adjustments that disadvantage the concealing party. The court may also make costs orders requiring the non-disclosing party to pay the other party's legal expenses.

The case of Powell v Christensen [2020] FamCA 944 provides an instructive example.

The husband invested approximately $100,590 in cryptocurrency ($75,000 from business funds and $25,590 from a joint account) after separation and in breach of an injunction restraining him from dealing with property.

He claimed the value had decreased to around $47,000 but failed to produce any documentation to support this assertion.

The court found the husband had deliberately failed to comply with disclosure obligations and determined that the original purchase price should be treated as the current value, effectively "adding back" the full amount to the property pool in the wife's favour.

While the current approach of the court is no longer to "add back" assets which have been disposed of, or which no longer exist, any failure to disclose assets can still be taken into account in property settlements, against the person responsible for the disposal or non-disclosure of the asset.

Even if you believe your crypto holdings are untraceable, digital trails often exist.

Bank statements showing transfers to exchanges, tax returns declaring capital gains, email confirmations, and blockchain records can all identify cryptocurrency holdings.

Forensic accountants are increasingly skilled at uncovering hidden digital assets.

How Is Crypto Split in an Australian Divorce?

Cryptocurrency is divided as part of the overall property pool using the court's standard four-step process.

First, all assets and liabilities are identified and valued. Second, each party's contributions are assessed, including financial and non-financial contributions.

Third, future needs are considered. Finally, the court determines what division would be just and equitable.

Given cryptocurrency's volatility, valuation timing is important.

Parties may agree to value crypto at a specific date, use an average, or liquidate the asset into Australian dollars before final orders.

Any capital gains tax liability must also be factored into the division if the cryptocurrency is to be sold as part of the settlement.

If you have substantial crypto holdings, our high-net-worth divorce lawyers have the expertise to handle complex asset valuations.

Can My Wife Claim Crypto I Owned Before Marriage?

Cryptocurrency owned before the relationship is not automatically excluded from the property pool.

While initial contributions are relevant to the court's assessment, they do not necessarily shield pre-relationship assets from division.

All assets of the parties are taken into account as part of a property settlement, irrespective of when they were acquired.

The court will consider how the cryptocurrency was used during the relationship, whether it increased in value, and whether any profits were applied to joint purposes.

If pre-marital Bitcoin holdings grew substantially during the marriage or were used to fund relationship expenses, the other spouse may have a legitimate claim.

A spouse who kept pre-marital holdings entirely separate and did not use any gains for relationship purposes would have a stronger argument for retaining those assets.

However, those assets will still be taken into account as part of the overall assets to be divided, even if the court also takes into account the value of the contribution of the pre-marital holdings by the spouse who owned them.

Can Crypto Be Protected in a Divorce?

It is possible to take steps to protect cryptocurrency holdings, though no strategy guarantees assets will be excluded from property division.

One option is entering into a binding financial agreement before or during the relationship.

A BFA can specify how cryptocurrency assets will be treated if the relationship breaks down.

For a BFA to be enforceable under the Family Law Act 1975, both parties must receive detailed independent legal advice in writing on the document.

Cryptocurrency can be included in these agreements alongside traditional assets.

Beyond formal agreements, practical steps help establish clarity around ownership, including maintaining good records of acquisition dates, keeping personal holdings separate from joint accounts, and documenting pre-relationship holdings.

These records can assist in demonstrating contributions if a dispute arises.

What Happens If Crypto Is Moved or Sold Before Settlement?

Attempting to conceal or dissipate cryptocurrency before settlement is both legally risky and potentially futile.

The court has broad powers to address conduct intended to defeat a spouse's claim to property.

If cryptocurrency is moved or sold to reduce the asset pool, the court may treat this as dissipation of assets.

Under section 106B of the Family Law Act 1975, the court can set aside transactions made in bad faith and may order the party to account for the full value of disposed assets.

In Powell v Christensen [2020] FamCA 944, the husband purchased cryptocurrency after separation in breach of an injunction restraining him from dealing with property.

The court included the cryptocurrency at its original purchase price, regardless of the husband's claims that the value had decreased.

This outcome demonstrates that attempting to manipulate the asset pool through crypto transactions can backfire significantly.

Even where no injunction exists, disposing of assets shortly before or during proceedings will be scrutinised carefully, and must be fully disclosed.

Blockchain transactions leave permanent records, and exchange logs can be subpoenaed, making the risk of detection substantial.

When to Seek Help

If you or your spouse holds cryptocurrency, obtaining legal advice early in the separation process is essential.

Digital assets add complexity to property settlements, and missteps in disclosure or valuation can have significant consequences.

A family lawyer in Sydney with experience in cryptocurrency matters can help you understand your disclosure obligations, ensure your interests are protected, and navigate the valuation challenges that come with volatile digital assets.

At Unified Lawyers, we have extensive experience advising clients on property settlements involving cryptocurrency and other digital assets.

We also offer family mediation services if you prefer to resolve matters outside of court.

If you're facing separation and cryptocurrency is part of the picture, contact us for a consultation to discuss your situation and understand your options.

Frequently Asked Questions

1. Can crypto be hidden in a divorce?

While some people believe cryptocurrency is untraceable, this is increasingly not the case.

Bank statements showing transfers to exchanges, tax returns disclosing capital gains, blockchain analysis tools, and forensic accounting techniques can identify hidden holdings.

Hiding crypto breaches legal disclosure obligations with serious consequences including adverse findings, costs orders, and unfavourable settlement adjustments.

2. What if I can't access my ex's crypto wallet?

You can request disclosure through family law processes.

If your ex refuses to comply, courts can make orders compelling disclosure.

Bank statements may reveal transfers to exchanges, subpoenas can be issued, and forensic blockchain investigators can assist in tracing assets.

3. Is crypto traceable by the court?

Yes. Australian exchanges must comply with anti-money laundering laws and register with AUSTRAC, the Australian Transaction Reports and Analysis Centre.

Bank transfers to exchanges create records, and the blockchain maintains a permanent public ledger of all transactions.

Expert forensic analysis can link wallet addresses to individuals in many cases.

4. Will the court know if I moved crypto?

Blockchain transactions are permanently recorded.

If asset dissipation is suspected, courts can compel production of wallet information, exchange records, and bank statements.

Moving crypto creates a paper trail that may work against you.

5. What proof is needed to show I own crypto?

You should provide exchange account statements showing holdings, wallet addresses and balances, records of purchases including bank statements, tax returns where crypto was declared, and any correspondence confirming ownership.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.