Did you know that the rate of divorce in the United States was 2.3 per 1,000 people, following the CDC’s data collected in 2021? And here in Colorado, there were 2.9 divorces per 1,000 people in 2020, according to Statista.
Approximately 3 persons out of every 1,000 in Colorado are divorced or in the midst of one. The good news is that, as Statista points out, this is a declining trend. In 1990, the rate was 5.5 divorces per 1,000 people; by 2021, it had dropped to 3.3 divorces per 1,000 people.
When a couple decides to get a divorce, it’s common for them to try to fight over the assets and possessions they’ve accumulated during their time as a married couple. As you’re probably aware, this can lead to some pretty intense confrontations.
Therefore, the most crucial question we are attempting to answer is whether or not cryptocurrencies and other non-tangible assets are in the division. Let’s find out what the Colorado law states and how our attorneys at South Denver Law can help with such proceedings.
What is Cryptocurrency?
Before we get into the law side of things, it would be helpful if we uncovered what cryptocurrencies and other digital assets are.
In general, digital assets are non-tangible assets that you cannot touch but own. Here are the four main types:
A cryptocurrency is a form of digital currency that is unregulated by any financial institution or country. It consists of various kinds, like the prominent Bitcoin and altcoins such as Ethereum and Dogecoin, to mention a few. All of these are known as Decentralized Finance or DeFi.
The second type of digital asset in question for division after divorce are non-fungible tokens or NFTs. Financial securities known as non-fungible tokens are made up of digital data kept on a blockchain, a type of distributed database. Possession of an NFT is stored in the ledger, and the holder has the option to transfer ownership at any time, making it possible for NFTs to be bought, sold, and exchanged. These may be art, audio, video, in-game items, and music.
A cryptocurrency token that fulfills a specific function inside an ecosystem is a utility token. Users are granted the ability to carry out specific actions on a particular network by utilizing these tokens. A utility token is incomparable to any other token in its ecosystem. The Basic Attention Token (BAT) and the Golem (GNT) are two examples.
Yield Farming Tokens
Token holders can increase their benefits on various DeFi platforms by engaging in a process known as “yield farming.” The provision of liquidity to different token pairs entitles yield farmers to receive rewards in cryptocurrencies. Although many others exist, Aave and Uniswap are among the top yield farming algorithms.
One can earn money by using this digital asset by lending or borrowing it. In the process of lending, holders of coins or tokens can lend cryptocurrency to borrowers through a smart contract, and in return, they may gain a yield from the interest collected on the transaction. Farmers who want to borrow money can use one token as security to get another token as collateral for their loan. Following this, individuals can use the loaned coins to farm yield.
Is Cryptocurrency Considered an Asset in a Divorce?
Since cryptos are owned assets, by Colorado law, they are considered assets that may be divided equally during a divorce.
How Are Crypto and NFTs Defined in a Divorce?
During the divorce process, both NFTs and crypto-currencies, together with any other forms of digital assets, are considered possessions that can and will be divided.
Regarding the distribution of assets following a divorce in Colorado, cryptocurrencies and NFTs, like any other asset, are subject to fair allocation. They will first be valued and then divided in a manner that is considered to be fair for both of the parties involved in the transaction.
Do You Have to Disclose Cryptocurrency in a Divorce?
When getting a divorce, both parties must submit an affidavit called the “Sworn Financial Statement,” which must be validated. This documentation comprehensively summarizes the couple’s possessions, liabilities, earnings, and expenditures, which must be included in this affidavit.
If one of the parties possesses cryptocurrencies, this fact must be revealed in the affidavit and described as a property or a revenue source.
Nevertheless, the valuation date of the asset divide is crucial because this is a commodity whose price is subject to erratic swings. This date may be the one on which a divorce petition is submitted, the one on which the spouses sign a negotiated agreement, or the date on which cryptocurrencies are divided.
Contact South Denver Law for Help with Your Divorce Questions Today.
Nowadays, the partition of digital assets is becoming an issue, which adds to the already significant headaches of divorce, such as deciding who will take custody of the children. The best way to emerge unscathed from a draining divorce back and forth is to have a trained lawyer who thoroughly understands the digital asset split in Colorado and will help you get what you deserve from the situation.
Anyone who wants to get a divorce needs to have a strong understanding of how to catalog and value the assets held by their family before they can even consider filing for one. Having legal assistance from our firm during the entirety of this process is essential. We will ensure that the rules and regulations governing the division of all assets are adhered to during the process.
South Denver Law has successfully navigated complex divorce conflicts involving high-value assets and cryptocurrency on behalf of our clients. In some of these cases, the assets at issue were cryptocurrency.
Please call us at (303) 840-2700 or visit us at https://southdenverlaw.com/contact/to set up an appointment for a confidential consultation.