Crypto & Divorce in 60 Seconds

Annelies Van Zyl*

Remember when “property” in a divorce meant the house, the car and whatever was left in the joint account?

These days it can also include a pixel art JPEG worth six figures or a string of numbers locked away on a thumb sized USB. The family court now treats Bitcoin, NFTs and DeFi tokens just like bricks and mortar, yet they’re far easier to hide and much harder to price.

Typically, the main challenges in a crypto divorce are tracking down digital assets, dealing with volatile cryptocurrency prices, and ensuring full and frank disclosure from both parties.

If you’re separating, which triggers the need to identify, value, and divide assets, three golden rules will keep you out of hot water and expensive litigation:

• Show everything – full and frank disclosure and full financial disclosure are required by law. Disclose every wallet address, exchange account, dusty airdrop, and the ownership of cryptocurrency, no matter how small.

• Lock in value early – cryptocurrency prices swing wildly; agreeing on a valuation date stops tomorrow’s spike (or crash) derailing today’s negotiations.

• Factor in tax – transferring, selling or even burning a token can trigger capital gains tax, so build the bill into your settlement maths. Consider whether payment will be made in a particular currency, including cryptocurrency, as part of the settlement.

Get those right and you’re already halfway to a clean break… no matter what the market is doing. This helps ensure assets are fairly divided and included in the property pool, with transparency for the other party in negotiations.

Duty of Disclosure: Spotting Hidden Wallets

Australian family-law rules require each spouse to list all property, and that includes every satoshi and NFT. Full and frank disclosure and full financial disclosure are required in these proceedings to ensure transparency and fairness.

Yet crypto is portable and pseudonymous, so non-disclosure is common. To uncover hidden assets, it is important to gather all relevant documents, such as bank statements, tax documents, and transaction records.

Be alert to signs that your spouse may be hiding cryptocurrency, such as unexplained transfers or changes in spending habits. If you suspect hidden crypto, you should take steps to obtain evidence, including seeking expert legal advice and possibly engaging forensic experts. The ownership of cryptocurrency must be disclosed as part of the asset pool.

Accessing digital wallets often depends on having the correct password or passwords, which are essential for control and disclosure.
Things like the decentralised nature of crypto, anonymous transactions, and lack of regulation make it hard to trace. Every thing of value, including all forms of cryptocurrency, must be disclosed.

Signs of Hidden Cryptocurrency Assets

1. Bank & credit-card statements – look for AUD transfers to exchanges.
2. Email search – keywords “transaction confirmation”, “staking reward”.
3. Exchange statements – subpoena AUSTRAC-regulated exchanges first, as records can be subpoenaed from these exchanges to obtain transaction and ownership information.
4. Blockchain explorer scan – follow known addresses on Bitcoin, Ethereum.
5. Forensic accountant review – employ chain-analysis software to chase cross-chain hops or mixers.
   Penalty call-out: Hiding a wallet risks an add-back the court may credit its highest historic value to the non-disclosing party plus cost orders and, in extreme cases, contempt proceedings.
6. 
   Valuing Volatile Assets Without the Headache
7. 
   Prices can swing 10% in an hour, so when should you pin down cryptocurrency prices?
   Snapshot vs. TWAP
8. 
   • Snapshot – one price taken close to the settlement date; simple, Court-friendly.
9. 
   • 30-Day Time-Weighted Average Price (TWAP) – smooths out spikes; preferred where holdings exceed $250 k or include thin-traded tokens.
10. 
    Worked example: A Bitcoin wallet shows 3 BTC. Using a 30-day TWAP of A$105 000 gives a pool value of A$315 000. A single-day snapshot taken during a dip (A$98 000) would cut A$21 000 from the pool—enough to spark dispute.
11. 
    When to Hire an Expert
12. 
    Crypto value Suggested approach
    < A$50 k Exchange statements + snapshot
    A$50–250 k Exchange statements + 30-day TWAP

A$250 k or holdings in >3 chains Independent expert report with TWAP, volatility range and DeFi yield analysis

Current Legal Landscape (2024-25)

Australian legislation and fresh case law are sprinting to keep pace with crypto wealth. The milestones below shape how the Family Court now views digital assets: family courts are increasingly required to handle cryptocurrency assets as part of the property pool in divorce cases, addressing the legal challenges of dividing digital assets.

• Family Law Amendment (Digital Assets) Act 2025 – clarifies that cryptocurrencies, stablecoins, NFTs and DeFi tokens fall squarely within “property” for s 79 orders.

• Powell v Christensen [2020] – Consent orders set aside after discovery of a forgotten hardware wallet; illustrates duty to update disclosure right up to final orders.

These cases show judicial appetite for strong sanctions and a growing familiarity with blockchain evidence.

Tax Pitfalls & CGT Relief

Crypto is a CGT asset, so every disposal or deemed disposal matters. Be aware of the tax risks associated with prematurely distributed funds, such as when crypto is sold or transferred before settlement is finalized, as this can trigger unexpected tax liabilities and complicate fair division.
Event CGT outcome Tip for separating couples

Transfer under a Binding Financial Agreement (BFA) Roll-over relief available under ITAA 97 s 126 5 Ensure the BFA is executed correctly; otherwise, the ATO may treat it as a taxable event.
Sale of assets to fund cash payout Capital gain (or loss) crystallised Agree which party bears the CGT and adjust other assets to equalise.

Staking rewards or airdrops Taxed as ordinary income, then CGT on disposal Keep clear records of AUD spot rate when tokens are received.

A worked calculation in a CGT worksheet (download link provided with this article) helps couples see the net-of-tax picture before they negotiate percentages.

Smart Division Strategies

There’s no one size fits all way to carve up coins each method balances simplicity, tax and market risk. It is crucial to ensure that cryptocurrency assets are fairly divided during settlement, so both parties receive an equitable share. Compare these popular structures before committing:

Structure How it works Pros Cons

Direct split Each party receives half the private keys or exchange balance. Simple; preserves upside for both. Requires tech competence; duplicates future tax events.

Offset One keeps crypto, other takes more equity in house/super. No wallet hassles for non-crypto spouse. Concentrates volatility and tax on one party.

Escrow / multi-sig “stand-still wallet” Tokens moved to a new wallet needing both signatures until orders finalised. Blocks unilateral sell-offs; price swings shared. Minor cost & admin; still exposed to market risk.

Staggered divestment Coins sold over 6–24 months, proceeds split. Smooths volatility; aligns with CGT thresholds. Ongoing admin; lengthens closure.

Include a stand-still clause in interim orders: “No transfer, sale or encumbrance of digital assets without written consent of both parties or further court order.”

Safeguarding Digital Wealth During Proceedings

Lock assets down early to prevent a digital disappearing act and keep both spouses bargaining in good faith. Three reliable safeguards:

1. Freezing order (Anton Piller–style) – prevents bulk transfers; used where dissipation risk is high.
2. Hardware-wallet escrow – private keys stored with both solicitors or a neutral third party, and ensure the password to the wallet is securely managed to prevent unauthorized access.
3. Exchange notice & flag – notify Binance Australia, Independent Reserve or Swiftx; accounts can be marked to alert lawyers of suspicious withdrawals.
   Early action preserves the asset pool and reduces forensic-accountant costs later.
   NFTs & DeFi – Special Considerations
   Not every token is just a coin some earn royalties, others unlock utility or voting rights. Account for these quirks before you finalise the asset pool:
   • Royalty streams – many NFTs pay the creator a cut of secondary sales. Future cash flows must be valued (discounted-cash-flow method).
   • Utility & governance perks – access to token-gated events, DAO votes or in-game assets add intangible value. List them in disclosure.
   • Token burns – destroying an NFT is a disposal for CGT. Burning a token is an irreversible blockchain transaction, so know who bears the tax if one spouse plans to “burn for upgrade” post-settlement.
   • DeFi yield tokens – LP tokens and staking derivatives (e.g., stETH) behave like interest-bearing assets; treat accrued rewards as income when equalising.
   Key Takeaways & Next Steps
   Feeling overwhelmed? Start with these headline lessons and practical follow ups:
   • Digital assets are firmly on the Family Court’s radar. Full disclosure and sound valuation are non-negotiable.
   • Choosing the right division strategy—split, offset or escrow—can save tax and reduce price-swing stress.
   • NFTs, DeFi tokens and staking rewards add layers of complexity; expert advice pays for itself.
   Need help? Consult an experienced divorce lawyer with expertise in blockchain forensics and crypto tax before you sign any agreement.

Author

Annelie Van Zyl, is a divorce and family lawyer at Perth Divorce Lawyers, West Australia. She may be contacted via LinkedIn or at her legal practice.