Dividing Cryptocurrency in a Washington Divorce

Cryptocurrency has grown from a niche investment into a mainstream asset class, and it's showing up more often in divorce cases. If you or your spouse owns Bitcoin, Ethereum, or other digital currencies, it’s important to understand how these assets are handled under Washington divorce law.

Like any other financial asset, cryptocurrency must be identified, valued, and divided fairly. But because it’s digital, volatile, and sometimes anonymous, dividing it can present unique challenges.

Is Cryptocurrency Considered Marital Property?

In Washington, a community property state, most assets acquired during the marriage are presumed to be jointly owned, regardless of who owns the asset. That includes cryptocurrency purchased with marital funds.

If one spouse acquired cryptocurrency before the marriage or using separate property, that portion may be considered separate.  In that event, a proper tracing should be performed to ensure an accurate apportionment of marital property.

Challenges in Identifying Cryptocurrency Holdings

Unlike a traditional bank or investment account, cryptocurrency can be stored in digital wallets or on exchanges that may not be immediately visible during initial disclosures. If you suspect your spouse owns cryptocurrency but hasn’t disclosed it, your attorney can use formal discovery tools, such as:

• Requests for account statements or wallet addresses
  
  
• Subpoenas to major cryptocurrency exchanges
  
  
• Analysis of bank transfers or blockchain records

Failing to disclose cryptocurrency holdings during a divorce can result in court sanctions.

How Is Cryptocurrency Valued in Divorce?

Cryptocurrency’s value is notoriously volatile, and prices can swing dramatically in a matter of hours or days. To deal with this, parties may:

• Use the market value on a specific date (often the date of separation or trial)
  
  
• Agree to split the actual crypto instead of converting it to cash
  
  
• Revisit valuations closer to the finalization of the divorce to account for market changes

The approach you take depends on the size of the holding, your financial goals, and your comfort with crypto investment risk.

Dividing Cryptocurrency: Equal Split or Offset?

There are two main ways to divide cryptocurrency in a divorce:

1. Transfer the crypto directly. If both spouses are comfortable managing digital wallets, crypto can be split and transferred, preserving the asset in its current form.
   
   
2. Offset the value. One spouse keeps the cryptocurrency, and the other receives an equal-value asset (like cash, investments, or property). This avoids dealing with crypto directly but may raise fairness issues if the value changes quickly.

In either case, it’s important to document the division clearly in the final divorce decree to avoid future disputes.

Protect Yourself with Proper Documentation

To ensure a smooth division of cryptocurrency, it’s helpful to include in your divorce paperwork:

• The exact type and amount of cryptocurrency held
  
  
• Wallet addresses or exchange accounts
  
  
• Agreed-upon valuation dates
  
  
• Instructions for transfer or liquidation
  
  
• A plan for resolving future value disputes, if needed

This level of detail can prevent confusion or conflict later on.

Work with a Washington Divorce Attorney Who Understands Digital Assets

Cryptocurrency is a relatively new issue in divorce, and not all attorneys are familiar with how to handle it properly. At Magnuson Lowell, P.S., we stay informed on evolving digital asset trends and help our clients navigate the legal and financial complexity of dividing crypto.

We offer free telephone case evaluations. Contact us today to discuss your divorce and how we can help protect your interests in the digital world.

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