How is cryptocurrency treated for family law purposes? Crypto, Bitcoin and digital assets may be hot topics, but for family law purposes, these are assets & property or potential sources of income, just like more traditional investments.
In Alberta, the basic steps in property division, including for cryptocurrency and digital assets, are:
a) identify all property;
b) value the property;
c) assess any exemptions; and
d) distribution of property (equal or unequal).
Full disclosure of the digital assets is the essential first step. Disclosure of relevant financial information is required by the Alberta Family Property Act RSA 2000, Ch F-4.7 s. 31, and the Alberta Rules of Court.
Good records become even more important if there are big losses or gains in the digital assets.
A court in British Columbia was recently unimpressed with a spouse’s lack of transparency and records relating to his cryptocurrency:
“I turn now to the cryptocurrency assets. The respondent’s non-disclosure with respect to this asset is particularly egregious. I do not accept his evidence that all cryptocurrency assets were simply lost. In light of obtaining finality, and in light of the evidence that indicated that investments in cryptocurrency were in the range of $100,000, and accepting that there may have been some losses, I would attribute a value of $60,000 to the cryptocurrency accounts.”
M.W. v N.L.M.W.,
2021 BCSC 1273, para 361
In another Canadian case, MMD v JAH, 2019 ONSC 2208 additional disclosure of the digital assets was ordered, but with some limited protections to safeguard the security of the asset.
Other interesting issues that can arise are in valuation, tax issues and distribution options.
Cryptocurrency can also be a source of income, for example: if the trading or mining is a job, being paid in cryptocurrency or capital gains.
Bottom line: While the format of this digital commodity or source of income may look different, the fundamental principles of property division and income determination (for child and spousal support) continue to apply.
– Written by Ceri Chwieros