Family Law: 30 September 2025
Author: Julia Popa - Our People
Long have we surpassed the days where assets the subject of a property division between former partners comprise only ‘physical’ or ‘tangible’ assets.
The introduction of cryptocurrencies, such as Bitcoin and Ethereum, has added an ‘intangible’ layer into the considerations taken when dividing property between separated partners.
Pursuant to the Family Law Act 1975 (Cth) ("the Act"), cryptocurrency constitutes a divisible asset available for distribution between separated parties. Notwithstanding this, its definitive classification, valuation and subsequent division between parties is complicated by its volatility and anonymity.
Unlike your stock standard assets, such as real estate or money, cryptocurrency exists solely in digital form, recorded on databases known as ‘blockchains,’ and stored in encrypted wallets. These wallets are generally classified as either ‘hot’ or ‘cold.’
A wallet is considered ‘hot’ if it exists online and is accessible via the internet. Conversely, ‘cold’ wallets are stored offline in physical hardware devices, or even as QR codes on a piece of paper. Because cold wallets exist entirely offline, tracing the cryptocurrency contained offline poses challenges in ensuring that full disclosure of the digital asset has been made.
Indeed, the intangibility may tempt some people to conceal their cryptocurrency portfolio, potentially precluding its division between former spouses.
Given the increasing occurrence of digital currencies in modern asset pools, family lawyers must be aware of the complexities surrounding cryptocurrency. This will ensure that these digital assets are appropriately identified, traced and valued to ensure a just and equitable division between separated parties.
Separated parties have an obligation of full and frank financial disclosure. This requires them to exchange and disclose all assets, liabilities and financial interests. The process ensures that an asset pool can be definitively ascertained, which will then be subject to division between the parties. The percentage division of the defined asset pool between the former spouses will be determined in accordance with overarching family law principles.
Given that cryptocurrency is recognised as an asset under the Act, it necessarily follows that separated parties must make full and frank financial disclosure of their cryptocurrency assets, if they have any.
Unlike traditional assets, cryptocurrency wallets can be anonymous and effectively 'non-existent' on paper, particularly cryptocurrency the subject of offline cold wallets often stored in secured locations. cryptocurrencies can be transferred across multiple wallets, hot and cold, or converted into other digital assets without leaving conventional financial footprints.
Whilst this all sounds remarkably technologically advanced, the decentralised structure drastically allows these assets to be effectively ‘hidden’ from the eyes of the law.
Further and importantly, the vast majority of exchange platforms used for cryptocurrency transactions are located outside of Australia. This geographical reality effectively limits the ability of Australian family lawyers to enforce subpoenas seeking disclosure of cryptocurrency transactional information.
All of this is not to suggest that obtaining disclosure of cryptocurrency assets in the context of a family law matter is entirely impossible. Certainly, where a party is properly advised by their lawyer about their obligation to provide full and frank financial disclosure, we would expect them to disclose all cryptocurrency assets, whether the subject of hot or cold wallets.
Notwithstanding this, it simply illustrates that family lawyers should not accept such disclosures at face value. This is particularly when the cryptocurrency assets are significant in the context of the overall asset pool. Prudency should be exercised to verify the existence, location and value of these assets, including through investigation and expert assistance where necessary.
Once in receipt of financial disclosure with respect to cryptocurrency holdings, family lawyers can engage the assistance of expert forensic accountants with expertise in cryptocurrency to trace the disclosed transactions.
These experts possess extensive knowledge of blockchain technology and forensic tools that enable them to appropriately analyse the disclosure to ensure no stone is left unturned. Through this, they can determine the accuracy of the former partner's financial disclosure, which may include the identification of any previously undisclosed cryptocurrency assets.
Consideration of cryptocurrency disclosure is not akin to simply sifting through and tracing standard bank statements. Accordingly, while the engagement of a forensic expert may certainly come at a cost to the client, it will ensure that all cryptocurrency assets are accurately identified and valued.
As family lawyers, we will not heroically attempt to uncover potentially hidden digital assets absent any expert assistance. Doing so may risk overlooking critical information.
Just as house prices fluctuate based on market conditions, so too does the value of cryptocurrency.
Notwithstanding this, the key difference is that cryptocurrency valuations are far more volatile, and are subject to fluctuations daily, sometimes even hourly.
In the Australian Family Law system, when determining the value of the asset pool available for distribution between separated parties, we take it as at the current date. We do not take the value of the asset pool on the date of separation, nor any future anticipated date.
Accordingly, while we may obtain a formal valuation of a cryptocurrency portfolio prepared by a forensic accountant, the precise dollar figure at the time of that valuation is not necessarily the most important aspect. This is particularly so if the valuation report is obtained some weeks or months prior to a scheduled mediation or court event.
Rather, what holds greater significance is the number and types of cryptocurrency units held as identified in the expert’s report. This will then allow us to assign a dollar market value to the number of cryptocurrency units and types as at the date we intend to finally divide the property between the parties, whether at a mediation or final hearing.
Cryptocurrency is to be divided between former partners according to the same principles as all other property types, as set out under the Act and associated case law.
The Act requires consideration of the financial and non-financial contributions of both parties, as well as their respective future needs, which may be a consideration if one party is to have ongoing care of any children.
Of course, serious thought should be applied as to whether you actually wish to retain the cryptocurrency on a final basis. If, for example, your previous partner brought the cryptocurrency assets into the relationship, and you have neither traded in nor owned cryptocurrency previously, then it may not be a useful asset to retain. In such situations, it may be better to seek the same value in liquid cash or other less-volatile assets on a final basis.
This is a discussion that you would actively have with your family lawyer prior to making any final decision of what assets to pursue.
If you are in possession of a significant cryptocurrency portfolio going into a de facto relationship or a marriage, you may consider protecting such assets in the event of separation by way of a Binding Financial Agreement, colloquially termed a 'prenup.'
Binding Financial Agreements are written contracts between two people that stipulate the division of assets, debts, superannuation and financial resources following separation. Couples can enter these agreements before they enter a de facto relationship, before they get married, during their marriage or de facto relationship, or following separation.
Ultimately, Binding Financial Agreements seek to exclude the jurisdiction of the Court. The Act requires the Court to make orders for a property division that is "just and equitable" in all the circumstances. In doing so, the Court will consider whether there are any children to the relationship and the associated spend time arrangements, as well as the parties respective financial and non-financial contributions.
Nonetheless, couples, on their own volition, may opt for a division of assets that would not necessarily appear "just and equitable" on paper. In this case, if an individual would like to protect their cryptocurrency portfolio going into a relationship or a marriage, they may enter a Binding Financial Agreement, provided their partner is content with this. When done correctly, this Agreement will work to keep the Court from having a say in the division of the cryptocurrency assets.
Binding Financial Agreements are not simply a case of pen to paper and have strict requirement to ensure they are valid and successfully exclude the Court's jurisdiction. Key requirements include:
1. Each party must receive independent legal advice prior to signing. Essentially, this advice must cover how the Binding Financial Agreement affects the rights of the party receiving the advice. It should also explain the pros and cons for that party when entering the Binding Financial Agreement; and
2. Each lawyer must provide written confirmation that they provided this advice to their client.
Ultimately, Binding Financial Agreements can be quite complex. There are many boxes that must be checked to ensure that they are actually binding in every sense of the word. It is therefore essential to seek proper family law advice in relation to Binding Financial Agreements to protect cryptocurrency assets.
The Australian Family Law system has little choice but to keep pace with ongoing technological advancements. Asset pools comprising intangible and decentralised assets will only become more and more common in property settlements.
If you believe your former partner has cryptocurrency interests, it is imperative that you let your family lawyer know at your earliest convenience. Further, if you are in possession of a cryptocurrency portfolio and wish to protect this in the event of separation, it is important to obtain legal advice in relation to a Binding Financial Agreement.
If you would like any assistance with the above, please call our office on 03 8600 6000 and speak with one of our highly qualified and experienced family lawyers.