Divorce and Cryptocurrency

A recent survey indicated that 14%-17% of U.S. adults have owned cryptocurrency. That means a large number of divorcing couples will have some kind of crypto asset that must be equitably shared in a Pennsylvania divorce. But crypto is so new that divorce laws do not address it, and most lawyers don’t know how to handle it. At Karen Ann Ulmer P.C., we have the expertise to find, value, and negotiate fair settlements with cryptocurrency.

Problems with crypto

Cryptocurrency, which comes in many forms, is a mystery to most people. Often, only one spouse is involved in crypto. Statistically, that spouse is usually a man. Sometimes, the crypto holder has not even informed his spouse about his holdings, which can allow him to hide assets in a divorce.

It is not uncommon for someone to try to hide assets, which requires a forensic accountant specializing in divorce cases to track them down. But cryptocurrency usually requires an expert in digital forensics.

Another problem with crypto is that its value swings dramatically, even in a single day. In 2025, for example, Bitcoin experienced intense instability with wild daily swings, and ended up wiping out its year-to-date gains by December. Therefore, determining the value of the asset and how to split it can depend on when the valuation is performed, and that valuation can change dramatically by the end of the divorce.

Tax implications also need to be considered. The IRS does not treat crypto as money. It is considered an asset, and as with any other asset that has increased in value, if you sell it, you owe capital gains.

How to handle crypto in a divorce

If you suspect your spouse has crypto but it has not been disclosed on the financial documents submitted for your divorce, or if you suspect there are more assets than have been disclosed, we might engage a digital forensic expert. To the uninitiated, crypto may seem like something ethereal, existing entirely in a digital world and impossible to track. However, that’s only half true; it does indeed live in a digital world, but every single transaction is trackable if you know how. And it can be converted into real-world fiat currency (money), if necessary. But the first step is to find every wallet used by your spouse in every form of crypto. This must be handled by a digital forensic analyst with expertise in the many forms of cryptocurrency.

Once the crypto has been discovered, there are a number of approaches to dividing it. But given that it is a complex form of currency, division can also be complex. You should consider the pros and cons of each option. Here are a few:

• Sell the crypto and divide its value at that moment in time. Although this sounds simple, it is generally not the best option. As stated, the value varies wildly daily or even hourly. When is the right time to cash out? Will you be hit with big capital gains? But the biggest concern is that you are eliminating the significant future value of the asset over time by liquidating, thus short-changing your financial benefits. Some couples who want to sell choose to turn control of the wallet over to a third-party entity, which will monitor the wallet and determine a less volatile time to sell and split the value.
• Offset the value of the digital wallet by other assets in negotiation. This has a similar difficulty to cashing out: how do you accurately value something that is so volatile by nature, and what about its future value? However, this is a good option for a spouse who simply wants more of the marital assets and will let the spouse have the wallet if she gets the house, the car, and full custody of the kids. That said, she should consider the potential future value of the crypto assets before entering into any kind of agreement.
• Share the wallet. The spouse who owns the wallet will probably not agree to this, because it essentially turns over all control of the crypto to the future ex-spouse. That’s like allowing ex-spouses to maintain a shared bank account.
• Split the wallet on-chain. This is the simplest and most value-preserving solution. Splitting the shares into two wallets allows each spouse to control a fair portion of the crypto without losing current or future value. The difficulty here is that the spouse who didn’t know anything about crypto may not want to have to learn now and carry an asset that is a mystery to her. That said, it’s also an opportunity for her to enter into a new and valuable asset class.

There is a lot to think about when it comes to finding and negotiating a split of crypto assets in a divorce. You need to choose a legal team that knows how to properly handle this new asset and ensure that you receive a fair portion of its value. The team at Karen Ann Ulmer, P.C., can do just that. Request a confidential consultation today by calling (866) 349-4721 so we can get started right away.