As cryptocurrency becomes more popular across Colorado and the nation, it is increasingly becoming a point of contention in divorce cases. There are many difficulties associated with dividing cryptocurrency in divorce. However, failing to consider digital assets in a divorce may lead to financial loss.
According to CNBC, more than 20 million Americans currently hold cryptocurrency. What are some of the hardships associated with dividing and managing cryptocurrency in a Colorado divorce?
Placing a value on it
Arguably one of the biggest hurdles associated with handling cryptocurrency in a divorce involves determining exactly how much it is worth. The value of cryptocurrency is subject to major gains and dips, and its value on one day may prove much different than its value on the next.
Anticipating tax implications
Depending on how much cryptocurrency someone navigating divorce holds, there may be major tax implications. In some cases, capital gains taxes may kick in. Cryptocurrency holders also have an obligation to report cryptocurrency income. Failing to do so may lead to tax issues.
Former couples may also run into trouble when it comes time to transfer cryptocurrency to the other party. They may run into problems when it comes to the actual digital transfer. If one party in the divorce is new to cryptocurrency, this may present additional challenges. Both parties must understand how to use the digital currency, how any market fluctuation affects the currency, etc.
Though digital currency is not always easy to divide, it does hold real value, making it an important element in a divorce case.