Judges and lawyers grapple with the digital assets reshaping divorce settlements and property disputes. As cryptocurrency and NFTs infiltrate divorce and family law proceedings in Australia, judges are issuing unprecedented orders to protect digital assets. Legal experts warn legislation is struggling to keep pace.
The rapid rise of digital currency in Australia is fuelling a legal revolution in family law, with judges increasingly forced to issue extraordinary orders to prevent hidden cryptocurrency and digital assets from vanishing during divorce proceedings.
Leading family lawyer Michael Tiyce says the growing prevalence of assets like Bitcoin and non-fungible tokens (NFTs) is creating “grey areas” within property settlements and divorce disputes, prompting courts to take unprecedented steps to protect their value.
“Cryptocurrency or NFT digital real estate — which is also what it’s called — is simply dealt with as an item of property in the Family Court,” said Mr Tiyce, principal of Tiyce and Lawyers. “However, usually, cryptocurrency is more difficult to access than simply going to the bank. There will be passwords, or there might be phrases that are used.”
It is estimated that almost one in four Australians now owns digital assets, with a Tech Council of Australia-commissioned report forecasting that these holdings will contribute around $60 billion to the country’s GDP by 2030.
But the legal framework has yet to fully catch up with the surge in digital wealth. In the absence of clear legislation, judges are finding innovative ways to ensure digital assets are treated like any other property — whether cash, real estate or shares — and that parties to a dispute cannot conceal their value.
Mr Tiyce pointed to a recent case in which a husband failed to disclose his cryptocurrency holdings during divorce proceedings. While the judge stopped short of granting the wife direct access to his digital wallet, the court ordered the husband to surrender control of his cryptocurrency to a neutral third party.
“He had to hand over all his passwords and private keys, recovery phrases, and two-factor authentication associated with his cryptocurrency to a third party trustee,” Mr Tiyce explained. “It’s the same as making someone withdraw all their cash from the bank and giving it to a third party until the court can figure out what to do.”
According to Mr Tiyce, such “intrusive” orders could often be avoided if digital assets were properly disclosed at the outset of legal proceedings. “It is about protecting the integrity of the court process … in the same way the court can compel the provision of any account details or superannuation details,” he said.
The complexities of tracing and valuing digital wealth have also sparked a growing demand for specialist expertise. “Very often you will need to get crypto accountants involved,” Mr Tiyce said. “Lawyers will work hand in glove with experts, whether that is a forensic accountant or someone in the crypto sphere, to find a solution.”
With digital currencies and NFTs becoming an increasingly common part of modern wealth portfolios, legal experts warn that family law in Australia must continue evolving to keep pace. Until then, courts are expected to continue issuing novel rulings to ensure that, even in the world of cryptocurrency, no asset goes unaccounted for.
