Bethesda residents who watch financial news programs have undoubtedly noticed that cryptocurrency is an increasingly frequent topic.
Reports often focus on Bitcoin, the most popular cryptocurrency. Five years ago, a single bitcoin was worth about $540. A year later, the price had soared to about $2,500. Earlier this year, it surged into the stratosphere, topping $63,000. But as those who watch financial news networks know, Bitcoin owners take their lumps, too. The leading form of crypto has fallen back to $39,000 from its high less than two months ago.
What is cryptocurrency?
Cryptocurrency is a digital form of money that only exists online. You can’t hold a bitcoin in your hand, but you can use it online to buy goods and services.
The use of cryptography makes virtual currencies extremely secure – they’re nearly impossible to counterfeit or steal. It’s also nearly impossible to track crypto, which is why the digital monies are often used by drug cartels and in money-laundering, illegal weapons sales, etc.
Criminals aren’t the only ones using the opacity of crypto to their advantage. Some spouses eager to conceal wealth during a divorce are starting to turn toward Bitcoin, Ethereum, Dogecoin and others.
“Cryptocurrency has added a layer of complexity” to divorce, said financial planner Davon Barrett of Francis Financial in New York.
However, experts say bank and credit card statements can be used to track payments made to companies dealing in crypto.
It should be noted that hiding assets in a Maryland divorce is illegal.
The volatility of digital currency poses another problem for investors. Bitcoin lost a whopping 37 percent of its value last month alone, making it a very risky means of trying to conceal assets.
Its fickle nature also makes cryptocurrency tricky to split in a property settlement. Digital currency that’s worth $100,000 today might rise to $300,000 or fall to $50,000 during the divorce process.
The volatility might make it advantageous for a family law attorney to craft a formula to be in a divorce settlement. For example, if the value of crypto changes by “X” percent, there would be a corresponding change in how other assets are divided.
An experienced family law professional protects your interests in property division, as well as in disputes involving spousal support, child custody, child support and more.