The US legal system has yet to keep pace with the rapid development of cryptocurrencies, and the millennial generation, which holds the largest amount of crypto assets, is entering a period of high divorce incidence. Crypto assets are highly easily concealed, and dividing them is complex; from on-chain splitting to fiat currency cashing out, there are challenges. Experts point out that most spouses are even unaware that their partner holds crypto investments. This article is based on a CNBC article, organized, translated, and written by Foresight News.
(Previous summary: SEC Chair Paul Atkins: Tokenization and digital assets will “enter the financial system faster than expected”)
(Additional background: CoinShares: The digital asset treasury “bubble has basically burst,” and the next-generation DAT cannot be blindly issuing bonds and accumulating coins)

Table of Contents

• Crypto Asset Investigator: The Private Detective of the Digital Asset Divorce Era
• Core Legal Challenges in Crypto Asset Division
• Blockchain Ledger Transparency and Court Proceedings

In divorce cases, Bitcoin, Ethereum, stablecoins, and NFTs obtained during marriage are usually considered marital property, no different from brokerage accounts or second homes.

TL;TR

• The US legal system(especially divorce law)has not kept pace with the rapid development of cryptocurrencies, and the millennial generation holding the most crypto assets is entering a high divorce period.
• Crypto asset division is similar to other property types like real estate, with various handling methods: direct on-chain splitting of crypto assets like Bitcoin, selling and converting to fiat currency for division, or offsetting digital wallet values with other assets.
• A crypto asset investigator in Texas said that most of their clients(are women)face the biggest problem of: they simply don’t know their husband holds crypto investments.

Divorce inevitably triggers tricky division of marital property. Usually, the solution is quite straightforward: assets of both spouses need precise division, but assets like pets or aquariums cannot be handled that way. However, if you think “who can own the dog” is already complicated enough, then the difficulty of dividing crypto assets is truly a challenge.

Today, many families’ crypto holdings are relatively recent, and after Bitcoin, Ethereum, and other crypto assets reached record highs and then plunged significantly, investor confidence has been shaken, and the path to crypto division is even more foggy. But for many married Americans, current prices of cryptocurrencies are not even the core issue, because these assets are easily concealed by one party without the other knowing.

“In divorce cases, the trouble caused by cryptocurrencies is similar to longstanding offshore account issues, except that crypto assets can be transferred instantly and invisibly,” said Mark Grabowski, a professor of internet law and digital ethics at Edphi University and author of several crypto-related works. He added that the key issue is that ownership of crypto assets is not determined by account names but by who holds the private keys.

“As long as one spouse controls the wallet, it’s equivalent to actual control of those assets,” Grabowski said.

Now, lawyers must subpoena exchange records, trace blockchain transactions, and verify whether cryptocurrencies were purchased before or after marriage.

“Due to lack of transparency and unified reporting standards, it’s easy for one side to hide or underreport crypto holdings. Courts are still working to catch up with developments in this field,” Grabowski pointed out.

In theory, division of crypto-related marital property should be consistent with other property. Renee Bauer, a divorce lawyer experienced in crypto asset division, said that the core dispute between spouses appears simple: who can get the wallet?

“But this question triggers a series of complex situations never encountered in traditional property division,” Bauer said.

The first challenge is to determine the actual holdings of crypto assets.

“Retirement accounts have statements, real estate has clear addresses, but crypto can be stored on exchanges or in hardware wallets that one party ‘happens to forget to mention,’” Bauer explained.

Therefore, tracking crypto assets combines detective work and digital forensics. Once verified, the next step is to establish custody rights.

“Some couples want to retain the entire digital wallet(especially the spouse responsible for managing the wallet during marriage), while others prefer thorough monetary division,” Bauer said.

Courts are still exploring the best way to handle these issues.

“Additionally, there are security concerns: if one party hands over the private key, they are effectively surrendering control of the assets; if they refuse, courts will have to decide how to enforce access,” Bauer added.

She recalled a lawyer with little knowledge of crypto attempting to convert Bitcoin’s value into other assets for compensation but unaware that this approach is neither simple nor fair.

“Many divorce lawyers are lagging behind industry developments, and some don’t even require the other party to disclose crypto assets. In Connecticut, for example, there’s no dedicated space for crypto in financial affidavits. For some, if they don’t proactively investigate, they could miss a valuable asset,” Bauer said.

Crypto Asset Investigator: The Private Detective of the Digital Asset Divorce Era

BlockSquared Forensics is one of the few companies capable of helping locate concealed crypto assets. Founded and led by CEO Ryan Settles in Texas, the firm reports exponential growth in demand since its establishment in 2023. BlockSquared focuses on handling all matters related to cryptocurrencies in family law and divorce cases.

If one spouse(Settles claims most clients are women) suspecting their partner is hiding crypto assets, their lawyers might commission a BlockSquared investigation—from simple asset verification to cross-state tracking of crypto flow, deep dives into wallets and exchanges. The company then provides a flowchart detailing the transfer paths of crypto assets with timestamps.

He states that the demand for investigating whether a spouse holds crypto assets is increasing, “especially in high-net-worth divorce cases.”

Settles points out that millennials hold the most crypto, and in the next six months, this age group will enter a high divorce period. Coupled with increasing crypto holdings, investigations into crypto assets in divorce cases will become even more common.

Another focus of Settles is the tax liabilities of spouses, ensuring proper handling during divorce proceedings.

“There are many tax-related issues, and most people(including lawyers)are unfamiliar with them,” Settles said. He added that even a single crypto transaction can involve numerous taxable events and reporting requirements, which can surprise even experienced litigators.

“Most lawyers don’t understand the subject or the terminology; many blindly trust and never verify,” Settles said.

In many cases he handles, wives not only don’t know about their husbands’ crypto investments but may face huge capital gains taxes after property division is finalized.

“Unlike savings accounts, crypto prices can fluctuate wildly within a single day,” Bauer said. “Selling crypto for division can trigger capital gains taxes; holding assets can also lead to new disputes as values change.”

The IRS( in the US has relatively lenient reporting requirements for cryptocurrencies, which adds to the complexity.

“There are too many details involved, and many lawyers just nod and pretend to understand,” Settles said.

However, he states that clients usually only commission such companies when there’s good reason to suspect their spouse is concealing substantial crypto assets. The company’s pre-engagement fee is $9,000, with investigation costs up to $50,000. Settles claims their service fees often exceed lawyer fees.

) Core Legal Challenges in Crypto Asset Division

Roman Beck, a professor at Bentley University and director of the Crypto Ledger Lab, said that because this is a relatively new field, the best approach is: courts should divide not the digital wallets themselves but the assets controlled by those wallets.

“The legal definition of cryptocurrencies is not as unusual as people think. The basic principle is simple: in tax and most property law contexts, cryptocurrencies are regarded as property, not currency,” Beck said.

This means that in divorce cases, Bitcoin, Ethereum, stablecoins, and NFTs obtained during marriage are typically considered marital property, similar to brokerage accounts or second homes. The specific division method depends on state laws.

“Courts divide not the wallet but its value,” Beck emphasized.

He explained that the real legal question is not “who can get the wallet?” but “how do we allocate the economic value represented by the wallet, and who will handle the technical custody responsibilities afterward?”

This requires courts and lawyers to choose from three methods: direct on-chain splitting, selling and dividing the fiat proceeds, or offsetting with other assets.

“Technically, a wallet is essentially a set of private keys, usually stored separately in hardware devices, mobile apps, or written on paper as seed phrases. After divorce, securely sharing hardware wallets or private keys is impossible,” Beck explained.

Another complication in crypto divorce cases is the volatility of underlying assets. Price fluctuations make it difficult for spouses to agree on timing, whether in terms of relationship separation or digital asset division. In the past two months alone, Bitcoin’s price dropped from over $126,000 to around $80,000, a 35% decline, wiping out the year’s gains and experiencing daily swings.

If spouses handle the issue rationally rather than emotionally, one of the simplest solutions is on-chain splitting: establishing new wallets for each party, allowing them to continue holding their respective crypto shares; or signing legal agreements to clarify each party’s rights in the same wallet.

“They don’t have to sell assets immediately,” Beck said.

However, in practice, one party often isn’t familiar with wallet operations and thus distrusts such solutions.

Similar to jointly owned property, both parties can agree to entrust the crypto assets to a trusted third party for safekeeping until market conditions improve to reach an agreed minimum value.

But Beck added that although, from an economic and technical perspective, divorced spouses can clearly define their legal rights and delay liquidation until market conditions improve, this requires mutual agreement—and “most people just want to resolve this quickly.”

Blockchain Ledger Transparency and Court Proceedings

An encouraging aspect is that although cryptocurrencies have a reputation as “anonymous paradise,” certain features of crypto assets actually facilitate divorce proceedings.

“Bitcoin, Ethereum, and other public blockchains are inherently transparent ledgers; each transaction is permanently recorded. In other words, on-chain data analysis makes blockchain a very patient financial witness,” Beck said. “If you know how to interpret the blockchain, you can find perfect audit clues… The real frontier is not the law itself but forensic technology.”

Surveys by Gallup and Pew Research Center in recent years show that 14% to 17% of American adults have held cryptocurrencies(, forcing family law into a more data-driven realm.

“The combination of transparent ledgers and powerful analytical tools provides lawyers and judges with unprecedented means to reconstruct financial behavior—something impossible in the cash era. Future policy issues will revolve around how much scrutiny courts will demand in routine divorce cases,” Beck said.

Nonetheless, this does not mean people will stop trying to conceal assets. Settles said he can usually see asset movements on the ledger within 20 minutes.

“They start panicking, transferring assets, hiding assets, or moving assets into mixing services. It’s quite interesting,” Settles said.

And all these actions are traceable.

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