Am I entitled to a share of my ex-husband’s cryptocurrency in our divorce?

My soon-to-be ex-husband did not disclose his cryptocurrency holdings in our prenup when we first got married over five years ago, as he claims they had little value at the time. 

They have now significantly increased in value, and he is reluctant to include them in our divorce settlement. 

Am I entitled to a share of his crypto assets?

One in five UK marriages involve prenups, according to the Marriage Foundation

Ed Magnus of This is Money replies: With more and more Britons buying cryptocurrencies,  and with prenuptial agreements now relatively common, these two trends are on a collision course that will likely impact many more people in future. 

The number of people who hold cryptocurrencies in the UK is estimated to be 2.3 million, according to recent research by the Financial Conduct Authority.

And one in five UK marriages are thought to involve prenups, according to a survey conducted on behalf of the Marriage Foundation in July 2021.

A prenuptial agreement sets out how assets will be divided in the case of a future divorce.

As he has held these assets for more than five years, it is likely that your husband purchased Bitcoin – the oldest and most popular cryptocurrency. 

If that is the case, it will be worth a vast amount more today than it was when he bought it.

An estimated 2.3 million people in the UK are believed to hold cryptocurrency.

An estimated 2.3 million people in the UK are believed to hold cryptocurrency.

For example, had he bought the equivalent of one bitcoin, valued at £295 on 1 January 2016, it would now be worth £45,130 based on today’s prices – 153 times more than he purchased it for. 

While it had little value at the time of purchase, it is now likely to be highly valuable and therefore more relevant to your divorce proceedings.

We spoke to Harriet Errington, a family law partner at law firm Boodle Hatfield, to provide some clarity on the matter. 

Harriet Errington replies: The rapid rise in both popularity and value of cryptocurrencies means that such holdings are increasingly becoming a feature in divorce proceedings.

Not only are cryptocurrencies a relatively new type of asset which are notoriously difficult to trace, but the existence of a pre-nuptial agreement adds further uncertainty.

In England and Wales, prenuptial agreements are not automatically binding and may not be followed by the courts unless certain requirements have been met.

For example, they must be signed in good time before the marriage, they must be broadly fair, both parties must have had independent legal advice and, crucially, both parties must have fully disclosed all of their assets prior to signing.

A well drafted prenup will allow for certain types of assets to be ring-fenced, even if there has been significant growth in their value during the marriage.

Therefore, if your husband had disclosed his cryptocurrency holdings at the time of signing, the agreement could ensure that any increase in their value should also be ring-fenced and protected on divorce. But here, critically, they were not.

It is of little relevance that your husband is now reluctant to include his crypto assets in the divorce settlement.

The court will take into account all of the assets, including digital assets, when assessing what a fair outcome would look like.

If one party is reluctant to share a particular asset, they can of course make that clear during settlement negotiations.

For example, it might be balanced by a proposal that you receive more of a different type of asset instead, such as cash.

However, where a settlement is not reached, the court has wide-ranging powers to distribute assets in the manner it deems fit.

Depending on the circumstances, the court may decide that you are not entitled to a half share of the crypto holdings in any event.

Let us consider two very different scenarios.

In the first, your husband owned his cryptocurrency prior to marriage. He never did anything with it, simply allowing it to sit there and appreciate. You were never involved.

The likelihood of our reader getting hold of any of her husband's crypto assets will depend, in part, on how much she was involved in his investing and whether it met the family's outgoings

The likelihood of our reader getting hold of any of her husband’s crypto assets will depend, in part, on how much she was involved in his investing and whether it met the family’s outgoings

Here, provided the court is satisfied that your claims (housing, maintenance and so forth) can be met using other assets, it might simply leave the cryptocurrency with your husband.

In the second scenario, throughout the marriage your husband continued to invest, consulting you throughout, as well as selling crypto assets to meet the family’s outgoings.

You were both involved, even if only your husband actually did the investing. Here, the holdings are more likely to be divided.

If you are not completely comfortable delving into the world of cryptocurrency it is advisable to be represented by someone who is; whilst also considering taking a larger share of the other assets such as cash or property in lieu of crypto holdings.