Why Steemians Must Pay Attention to Cryptocurrency in Divorce Proceedings

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The rapidly evolving world of digital assets has begun to influence many facets of life. For Steemians, this has broad implications, particularly when it comes to marriage and divorce. An increasing number of divorce proceedings are featuring digital assets, like Steem and other cryptocurrencies. These digital assets are now a common part of property settlements, highlighting the importance for Steemians to understand their potential legal implications.

A research study conducted by market research firm GWI suggests that around 10.2% of global internet users aged between 16 to 64 own cryptocurrencies. As a Steemian, this statistic underlines the pervasive nature of crypto and how it’s becoming a common aspect of our financial landscape. This means crypto assets are increasingly subject to legal discussions in matters like divorce.

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Divorce rates globally vary, with World Population Review stating rates as low as 0.15 divorces per 1,000 residents in Sri Lanka to highs of 5.52 per 1,000 people in the Maldives. These figures paint a picture of an undeniable trend: as more people invest in cryptocurrencies, more digital assets are involved in divorce settlements.

Understanding the legalities surrounding digital assets during a divorce is essential for Steemians. Courts typically follow a specific process in divorce proceedings. This includes determining what assets are available for division, assessing the contributions of each party, considering if any adjustments need to be made, and evaluating each party's future needs. This same process applies to digital assets, including cryptocurrencies like Steem.

When it comes to cryptocurrency in divorce settlements, several crucial factors need to be considered. Both parties in a divorce must disclose all their assets, digital or otherwise. The court then identifies and values these assets, with the value of cryptocurrency being determined by the open market, and often assessed via an exchange.

Market volatility is another critical factor. The crypto market is notorious for its unpredictable swings, which can significantly affect the value of digital assets during divorce proceedings. As Steemians, being aware of this volatility is crucial when considering how to deal with cryptocurrency assets during a divorce.

Another point of contention that Steemians must be aware of is the capital gains tax. Those who have acquired crypto as an investment asset must pay capital gains tax on any disposal, exchange, or swap. If both parties agree that the crypto should be sold as part of the property settlement, then the capital gains tax liability will be realized and form part of the asset pool.

Cryptocurrency staking rewards can also form part of the divorce settlement. Staking involves locking up crypto holdings to earn interest or rewards, a practice common among Steemians. These rewards can form part of either spouse’s income and are recorded on their individual tax returns, similar to how dividends are dealt with. Thus, Steemians must take into account that retaining crypto staking rewards could potentially increase their taxable income.

Importantly, the digital nature of cryptocurrency also provides opportunities for dishonest parties to hide their assets during divorce proceedings. This underscores the importance of transparency and honesty in disclosing digital assets, as well as the potential use of crypto forensic specialists to track any hidden assets.

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Lastly, Steemians should be aware of the implications of prenuptial agreements involving crypto. Crypto can be included in a binding financial agreement, including a prenuptial agreement. If such an agreement exists, then specific entitlements to assets like crypto must be honored.

In conclusion, the intersection of cryptocurrency and family law is rapidly evolving. As Steemians, understanding how these digital assets are handled in legal situations like divorce is of paramount importance. This knowledge allows for informed decisions about investing and managing these assets, contributing to a more secure and advantageous financial future.

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