As the world around us continues to evolve, digital currency is being hailed as a revolutionary concept, one that is truly symbolic of our digital age, writes John Bui.
With the growing popularity of digital currency, we are becoming increasingly familiar with the names bitcoin, tether, and solana, among others.
Cryptocurrency is a type of digital asset existing only in electronic form. Much like conventional methods of payment, cryptocurrency can be used for the exchange of goods and services online. Cryptocurrency enjoys a lot of relevance in our era, with it also being one of the most popular aspects of the stock market.
Due to its widespread presence, family lawyers will inevitably need to deal with digital assets on a more frequent basis. However, in the nexus between the law and digital currency, there lie some peculiar complexities.
Owing to its intangible nature, cryptocurrency proves to be a particularly intricate asset when it comes to property settlements.
Value of cryptocurrency
Since cryptocurrency is still in its rudimentary stage, the value of the currency constantly fluctuates. Even within a matter of a few seconds, the value of cryptocurrency can be expected to rise and fall.
This volatility of cryptocurrency’s value needs to be thoroughly considered for the division of assets in divorce cases. As it is extremely unpredictable to know whether the value of cryptocurrency will appreciate or depreciate, the lawyer needs to take great care when determining who gets possession of the assets.
Under the Family Law Rules 2004, all involved parties are required to make full and frank disclosures of their financial assets.
Cryptocurrency uses cryptography for ensuring the security of transactions. Cryptography also allows owners to maintain anonymity.
In these cases, if the holder of cryptocurrency is unwilling to disclose digital assets, it can be difficult to trace ownership. This breach of a fundamental legal rule can lead to unfair distribution of assets, which is a serious challenge that lawyers face.
Holders of cryptocurrency need to have an understanding of the risks associated with their digital money. Because cryptocurrency is decentralised, there exist several possibilities for cyber crimes to occur.
This poses great risks, and the owner of the cryptocurrency can also lose all investments. When distributing such assets, the lawyer needs to be aware of these risks and make legal decisions accordingly.
Cryptocurrencies are continuing to evolve at a fast rate, and the legal responses to such developments have not been proportionate. There have not been many cases in family law that have involved cryptocurrency. In the absence of substantial precedents, family lawyers find it particularly challenging to deal with these digital assets. This creates a growing gap between cryptocurrency and the law, making it difficult for lawyers to deal with the ambiguities involved with cryptocurrency.
The law needs to continually evolve to accommodate all developments within a society. Current trends have highlighted the potential of digital currency to become the new normal.
The importance of changing laws in accordance with the changes that take place in society cannot be understated. Legal developments in relation to digital currency are needed to accelerate progress in society.
John Bui is the principal solicitor at JB Solicitors.