Digital asset and tax specialist Susan van der Byl explains how to spot the signs of hidden digital assets, with some practical steps for family lawyers to take during financial disclosure.
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Cryptocurrency is increasingly appearing in divorce proceedings, yet many legal practitioners still encounter uncertainty when digital assets form part of the financial disclosure process. While media coverage often focuses on the perceived difficulty of tracing crypto holdings, the practical reality is more nuanced. In many cases, digital assets are traceable, but only if lawyers and advisers know what to look for and understand how those assets are typically held.
For family lawyers, the challenge is not simply identifying cryptocurrency, but understanding how it fits within the broader framework of financial disclosure, valuation, and tax treatment during divorce.
Why crypto is becoming more visible in divorce cases
Over the past decade, cryptocurrency has evolved from a niche technology into a mainstream investment class. Many individuals now hold digital assets alongside traditional investments such as equities, property or pensions.
This means cryptocurrency is increasingly appearing within matrimonial finances. However, unlike conventional assets, crypto holdings may be stored across multiple exchanges, private wallets, or decentralised platforms. In some cases,individuals may also move assets between wallets, making holdings less visible during initial disclosure.
For lawyers, the key point is that cryptocurrency should be treated in the same way as any other financial asset within divorce proceedings. If a party holds digital assets, those holdings must be disclosed and considered as part of the overall financial settlement.
Understanding how crypto is held
One of the main reasons cryptocurrency can be overlooked in divorce cases is the variety of ways it can be stored.
Digital assets are generally held in one of three ways:
Centralised exchanges
Many investors hold cryptocurrency on trading platforms that function similarly to brokerage accounts. These platforms typically maintain transaction records and account balances, which can be requested during disclosure.
Private wallets
Some individuals transfer assets from exchanges into private digital wallets. These wallets are controlled bycryptographic keys rather than account logins, which can make them less visible in traditional financial documentation.
Multiple platforms or transfers
Crypto investors may move assets between exchanges and wallets, sometimes frequently. This can complicate attempts to establish a clear picture of historical ownership.
For family lawyers, this means disclosure should extend beyond standard bank statements. It may be necessary torequest exchange records, transaction histories, or wallet addresses where relevant.
Identifying indicators of undisclosed crypto assets
Although cryptocurrency can appear opaque at first glance, there are often indicators that digital assets exist.
These might include:
- Transfers to or from cryptocurrency exchanges appearing in bank statements.
- References to crypto platforms in financial records or email correspondence.
- Tax reporting documents linked to digital asset transactions.
- Unexplained changes in liquidity that could indicate asset transfers.
Where such indicators exist, specialist forensic analysis may be required. Blockchain transactions arepermanently recorded on public ledgers, meaning that once a wallet address is identified, transaction histories can often be analysed.
In other words, crypto transactions are rarely invisible. The challenge is identifying the relevant entry points during disclosure.
Valuation challenges during settlement
Another complexity in crypto-related divorce cases is valuation.
Cryptocurrency markets can be highly volatile. The value of an asset may change significantly between the date ofseparation, financial disclosure, and settlement. This raises questions about which valuation point should be used when calculating the matrimonial asset pool.
In practice, the same principles applied to other volatile assets can often be applied here. However, lawyers may wish to consider mechanisms such as:
- Agreed valuation dates.
- Asset transfers rather than cash equivalents.
- Structured settlements that account for market volatility.
Each approach has different implications depending on the parties’ circumstances and risk tolerance.
The tax considerations lawyers should not overlook
Tax treatment is one of the most commonly misunderstood aspects of cryptocurrency in divorce proceedings.
In many jurisdictions, digital assets are treated as property for tax purposes rather than currency. This means thattransferring or disposing of crypto assets can trigger capital gains tax depending on how the transfer is structured.
For example, where assets are sold to facilitate a settlement, a taxable gain may arise if the value has increased since acquisition. In other cases, transfers between spouses may be structured to avoid immediate tax liabilities, depending on the applicable legal framework.
For family lawyers, early collaboration with tax specialists can help prevent unintended consequences when structuring settlements involving digital assets.
Practical steps for family lawyers
As cryptocurrency becomes more common within matrimonial finances, family lawyers are likely to encounter these issues more frequently. A few practical steps can help ensure digital assets are addressed effectively during proceedings:
- Ensure disclosure requests explicitly reference digital assets and cryptocurrency holdings.
- Review bank statements for transactions involving known crypto exchanges.
- Request exchange records where cryptocurrency activity is suspected.
- Consider involving forensic blockchain specialists where necessary.
- Obtain tax advice when structuring settlements involving digital assets.
Ultimately, cryptocurrency should be approached in the same way as any other asset class within divorce proceedings. While the technology may be unfamiliar, the underlying legal principles around disclosure, valuation, and fair distribution remain the same.
A growing area of financial complexity
As digital assets continue to move into the financial mainstream, their presence in divorce settlements will onlyincrease. For family lawyers, developing familiarity with cryptocurrency is becoming an important part of modern financial disclosure practice.
The key takeaway is that crypto does not exist outside the legal framework of divorce. With the right expertise and investigative approach, digital assets can be identified, valued, and incorporated into settlements just like any other component of matrimonial wealth.
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About the author
Susan van der Byl is a client and account manager at Nephos Group, an accountancy consultancy with a digital asset specialisation arm. A qualified Chartered Accountant (South Africa) and CFA Level II candidate, she specialises in financial reporting and advisory for high-growth, digitally native businesses operating across multiple jurisdictions. Prior to joining Nephos in 2025, Susan trained at Deloitte, where she worked with clients across sectors including logistics, media, real estateand investment entities, and completed an international secondment in Sydney. At Nephos, she focuses on client relationship management, financial reporting and helping businesses navigate complex accounting and compliance requirements as they scale internationally.