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The explosive growth of cryptocurrency has added a layer of complexity to marriage and divorce in New York. What was once limited to real estate, retirement accounts, and personal property has expanded to include digital wallets, NFTs, and volatile cryptocurrency portfolios.
As couples enter marriage with a broader array of financial assets, questions are emerging: How are crypto holdings treated in a divorce? Can you protect them with a prenuptial agreement? And how do New York courts view these digital assets when it comes time to divide property?
If you or your partner hold cryptocurrency, here’s what you need to know.
Understanding Cryptocurrency in Divorce
Cryptocurrency is a digital asset that relies on blockchain technology rather than centralized banks. Bitcoin, Ethereum, and other cryptocurrencies are increasingly viewed as investment vehicles, but in divorce, they present distinct legal challenges:
- Valuation is volatile. A portfolio worth $100,000 today might be worth $60,000—or $150,000—a few weeks later.
- Ownership is sometimes opaque. Cryptocurrency can be held in anonymous wallets or moved between exchanges.
- It’s easily overlooked or hidden. Unlike traditional bank accounts, crypto can be transferred without a paper trail.
Due to these issues, courts, attorneys, and financial experts are developing new tools to facilitate the fair and accurate division of digital assets.
Equitable Distribution in New York and Digital Assets
New York follows an equitable distribution model, meaning property acquired during the marriage is divided fairly, but not necessarily equally, when a couple divorces.
This includes:
- Real estate
- Bank accounts and investments
- Retirement funds
- Businesses
- Cryptocurrency acquired during the marriage
Like any other asset, cryptocurrency must first be classified as either marital or separate property. Assets purchased before the marriage are typically considered separate, unless they were later commingled (e.g., transferred into a shared account or used to buy joint assets).
Once classified, the court considers various factors to determine fair distribution, including:
- Each spouse’s financial contributions
- The value of other assets
- Each party’s future earning capacity
- Any written agreements, like a prenup or postnup
Prenups and Protecting Crypto Before Marriage
A prenuptial agreement is one of the best tools to address digital assets, such as cryptocurrency, proactively. A prenup allows couples to decide in advance how cryptocurrency will be treated in the event of divorce.
A well-drafted agreement can:
- Define what digital assets are, separate vs. marital property
- Outline how gains, losses, or income from crypto will be handled
- Allocate responsibility for taxes, fees, or portfolio management
- Identify how crypto wallets and records must be maintained
For example, a prenuptial agreement might state that any Bitcoin owned before marriage remains separate property, but any additional cryptocurrency purchased during the marriage will be divided 60/40.
Without a prenuptial agreement, these decisions are left to the court, and if the asset is difficult to trace or its value fluctuates, disputes can escalate quickly.
The Challenge of Valuing and Dividing Cryptocurrency
Unlike a checking account or a 401(k), cryptocurrency doesn’t have a stable value or physical presence. That makes valuation and division particularly tricky.
Key challenges include:
- Timing the valuation: Should the value be assessed on the date of separation, the date of divorce, or some other benchmark?
- Splitting vs. offsetting: Should crypto be divided directly, or should one spouse receive a larger share of another asset (like a retirement account) to offset the value?
- Tracking transactions: If one party moved funds through multiple wallets or exchanges, a forensic investigation may be necessary.
Some solutions include:
- Selling the crypto and dividing the proceeds
- Transferring half the tokens to the other spouse
- Assigning an agreed value and compensating the other spouse with cash or other property
Courts may require parties to use a financial expert familiar with digital assets to provide a valuation or trace ownership history.
How New York Courts Are Handling Crypto Division
New York courts increasingly recognize cryptocurrency as property subject to division, but there’s still no uniform approach. Outcomes depend heavily on the facts of each case and the quality of legal representation.
In recent cases, courts have:
- Treated Bitcoin and Ethereum as marital property
- Issued discovery orders to compel parties to disclose wallet holdings
- Approved expert testimony on valuation and asset tracing
- Honored prenups that explicitly covered digital asset terms
However, some spouses have successfully hidden or undervalued crypto assets, leading to post-divorce litigation. That’s why full disclosure and careful legal drafting are essential.
Takeaways for Protecting Crypto in Marriage and Divorce
If you or your spouse owns cryptocurrency, here are some practical steps to protect your interests:
- Before marriage: Consider a prenuptial agreement that clearly and precisely addresses digital assets.
- During marriage: Keep good records of when crypto was acquired, in whose name, and how it was used.
- In divorce, work with a family law attorney experienced in digital asset division and consider hiring a forensic accountant or valuation expert.
Transparency and legal planning are your best defenses against potential risks.
Talk to a New York Divorce Lawyer About Your Digital Assets
At Aiello & DiFalco, LLP, we help individuals and families across New York protect their financial interests, including complex assets like cryptocurrency. Whether you’re entering marriage, negotiating a prenup, or preparing for divorce, we provide clear guidance, strategic advice, and strong advocacy. Contact us today to schedule a confidential consultation.