More people in Colorado and around the country are investing in cryptocurrency. Whether they have long-term holdings in bitcoin or ethereum or they are experimenting with new coin offerings, crypto assets have become an exciting portfolio option for many enthusiasts. However, cryptocurrency, while known for some large increases in value, is also known for swift and severe price fluctuations. As a result, these investments may be some of the most challenging assets to value during a divorce.
Accounting for price fluctuations
Asset division is often complex, especially when a couple has significant funds and property. Because Colorado is an equitable distribution state, family courts look to find a fair solution. In order to agree on a settlement, however, both parties must agree to a value or seek a ruling from the court on the value of an asset. When it comes to cryptocurrency, spouses may want to build in a clause that deals with price fluctuations before the divorce is completed. If the value of crypto assets change by a certain percentage, another asset distribution may be affected in order to ensure a fair balance in this type of complex property division.
Keeping taxes and liquidity in mind
There are a range of questions to consider when determining the valuation of crypto assets. If both parties are involved in crypto, it may be as simple as sending funds from one wallet to another. However, if crypto assets need to be converted into U.S. dollars, the project may be more complex, as some liquidity may be limited. Selling cryptocurrency may also come with a tax burden, which would also need to be distributed between the spouses.
Cryptocurrency may add other wrinkles to the divorce process as well, especially in more contentious situations where one spouse may attempt to hide assets. Crypto experts or advisers may be called in by either party’s attorneys to help resolve questions.