Cryptocurrency in a Divorce Action
Over the past few years, cryptocurrency has become more of a mainstream asset than ever before. Bitcoin and Ethereum are two of the most popular crypto coins available on the market. As of this writing, Bitcoin is worth $44,049.20 per coin and Ethereum is worth $2,429.50 per coin; however, those values will fluctuate by the time I finish this writing.
The difficulty in awarding cryptocurrency in divorce is that it is extremely volatile, and values can significantly fluctuate on an hourly basis. So, what is the best way to determine a ‘fair and equitable award’ of something whose value can only be determined in real time?
Rather than base an award off of the perceived dollar value, another method to determine ‘a fair and equitable award’ of cryptocurrency is to use the number of coins (similar to number of shares in a stock award). If the community owns 20 Ethereum and 10 Bitcoin, then perhaps a fair division would be for each spouse to be awarded 10 Ethereum and 5 Bitcoin. This will allow each party to determine whether they want to hold crypto as an investment or sell portions of it when it reaches a certain threshold value.
A secondary benefit to transferring cryptocurrency coins rather than selling, is that in Washington State capital gains taxes apply to all profits made from any sale; however, you are only able to deduct up to $3,000 from any crypto losses.
As of the conclusion of this writing, Bitcoin is now $44,126.10 per coin and Ethereum is now $2,431.78 per coin.
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