The Financial Times reports that lawyers fear parties in divorce settlements may start hiding money in bitcoins. This isn't an idle concern: The question of how to hide assets in bitcoin has been popping up in bitcoin discussion forums, the FT writes. In a December thread on forum Bitcoin Talk, for example, users debated how difficult it would be for one man's wife to get half of his bitcoins in a divorce.
"Her lawyer is arguing he must have much more money than he claims to," wrote the commenter who started the thread. "Does the court have right of access to his bitcoin wallet?"
Spouses have long tried to hide assets in divorces; bitcoin could just be a new frontier, says one attorney. "Husbands are becoming more and more creative in terms of what they do to reduce their wealth and the courts are struggling to catch up. It's just like when the internet started and it was difficult for courts to catch up," said Frank Arndt, an attorney at one UK law firm.
Bitcoin could be a good hiding place for assets in part because it's difficult to trace currency ownership to particular individuals. The currency could also allow a spouse to quickly shift assets to someplace courts can't reach.
"One of the appealing things about bitcoin is its ability to quickly transfer funds to a destination out of US jurisdiction. That makes it difficult to retrieve those funds. A friend or other institution holding the funds outside the country would be harder to get the money back from," wrote Coindesk's Danny Bradbury.
The legal system is already trying to figure out how to respond. Courts in California have asked for bitcoin disclosures in some cases, the FT reports.
Thus far, much of the talk surrounding Bitcoins and divorce seems to be hypothetical, and the FT story largely focuses on the UK. However, the discussion points to a much broader issue: the uncharted legal territory surrounding cryptocurrencies. This could extend far beyond the boundaries of divorces and into other family matters, as one attorney told Coindesk.
"We are going to have family law issues that crop up. We're going to have estate issues, and people dying with substantial amounts of bitcoins. The question becomes, are they disposed of through the estate, or in another manner?"