Today, bitcoin is no longer an obscure investment option for a few fringe netizens. Cryptocurrency is now a truly mainstream phenomenon, and many individuals are jumping on board the virtual currency train in the hopes of earning a fortune. But what happens when you get divorced with millions of dollars in your bitcoin wallet? Is it true that concealing assets has become much easier with the advent of virtual currency?

Bitcoin is Designed for Anonymity

If you want to conceal assets in a divorce, anonymity is important. The last thing you want is a clear paper trail that details every transaction with your name on each financial record. As it turns out, bitcoin and other cryptocurrencies are designed to provide almost unparalleled anonymity. For the average person, there is no real way to determine who owns any of the 21 million bitcoins in circulation. 

The only way to determine who owns which bitcoins is with a “private key.” When individuals purchase bitcoin, they receive this private key. This allows them to trace their own investments. You’ve probably heard a few horror stories about people losing their private keys, thereby preventing them from ever gaining access to their investments again. Investors also use third-party services called exchanges to hold these private keys. 

The distinction between public and private keys is important. Without the private key, it is impossible to figure out who owns which bitcoins. You can trace specific bitcoins using a public key, but you will not know who actually owns these coins without the appropriate private key. In other words, spouses do in fact have the potential to conceal their assets using cryptocurrency during a divorce. 

Do States Recognize Bitcoin?

Even if a spouse manages to discover hidden cryptocurrency, is there any guarantee that the state would even recognize these as legal assets? Generally speaking, the United States recognizes and regulates digital currencies. That being said, certain states may have their own laws and regulations regarding crypto, and sometimes the legislation is slow to catch up with the rapidly evolving financial world. When couples get divorced, they are ordered to disclose all of their financial assets, and this includes cryptocurrencies. 

The Silver Lining

The silver lining is that while bitcoin was originally developed for anonymity, it was also designed for maximum transparency. This means that with the right approach, viewing and assessing the value of cryptocurrency may actually be easier than dealing with other concealed assets, such as those in offshore bank accounts or hidden away in safety deposit boxes. As long as you have an internet connection, you can theoretically access and view specific bitcoin investments. Another key point to remember is that at some point, a spouse must transfer money from their bank account into digital currency. The moment they do this, a record is created that can be tracked. 

Serious Consequence for Concealing Assets

Spouses face serious consequences for attempting to conceal assets in a divorce. While crypto is certainly proving to be a popular choice for those who want to keep hold of their investments, this strategy can easily backfire. If caught, spouses face significant fines and other legal consequences.