How Cryptocurrency Gets Divided in a Divorce

Written by Jonathan Breeden

August 16, 2021

North Carolina is an equitable distribution state for divorce. During a divorce, cryptocurrency and other digital assets are divided. However, dividing and distributing cryptocurrency is more complex than traditional assets such as real estate or stocks.

How NC Divides Assets in a Divorce

One of the biggest concerns people have when going through their divorce is that their ex will take them for everything they have. There is a common belief that your spouse is entitled to half of your marital property assets when you divorce.

In community property states, this is true. But in North Carolina, marital assets, property, and debts are divided equitably. However, that does not always mean equally.

Marital Property Versus Separate Property

In North Carolina, marital properties are assets and debts accumulated during the marriage. Separate property belongs to only one spouse, such as a home or property purchased before getting married. Inheritances and other gifts received by one spouse from a third party are also considered separate property.

If you purchased Dogecoin or Bitcoin before you got married, it is likely considered separate property. If you and your spouse agreed to invest in cryptocurrency, this asset would probably be divided.

When your assets include cryptocurrency, reaching an equitable arrangement is challenging. Digital assets are not valued at the same rate or according to the same standards as precious metals, property, and other investments.

The Volatility of Cryptocurrency in Divorce

One of the reasons it is so difficult to split up cryptocurrency is that its value is volatile. From the time you file for divorce to when your divorce is ready to be finalized, your marital cryptocurrency could exponentially increase or decrease in value. Your divorce lawyer should understand the volatility of crypto and know how best to handle cases where the value can change so dramatically.

Hiding Assets in Digital Currency

It isn’t only the value of the cryptocurrency that is volatile. Spouses often hide their assets in digital currency. You may never have even invested in cryptocurrency as a couple, to your knowledge. Your spouse could be doing everything they can to get away with more than they’re entitled to in your divorce.

If this happens, you need an experienced divorce lawyer to reveal the truth. We may need to file a subpoena or hire forensic experts to access your ex’s financial records. Although difficult to track, you can feel confident that any hidden accounts or assets will be uncovered with the right attorney by your side.

Tax Implications From Cryptocurrency Gains

Once you’ve agreed on the division of your cryptocurrency, or the court has decided one for you, you may find issues in transferring the crypto from one spouse to another.

You might have tax implications when you try to transfer or cash out your cryptocurrency. When you sell digital assets, you might owe taxes on long-term capital gains or income. We recommend an independent financial advisor to handle these transfers and potential tax issues.

Contact a Divorce Lawyer in North Carolina

Did you and your spouse invest in cryptocurrency or other digital currency? Dividing digital assets on your own is likely to lead to disagreement between you and your spouse. If you want to protect your assets during a divorce, contact a North Carolina divorce lawyer at Breeden Law Office.

Call (919) 661-4970 or use our quick contact form to schedule your free, no-obligation consultation today.


Divorce In North Carolina: What You Need To Know

A book by Jonathan Breeden