Cryptocurrency and Blockchain Technology in family law disputes (Part 1)

By Geoff Wilson and Fraser Bax / 28 February 2018

Whether you consider the cryptocurrency phenomenon to be the future of finance or an inherently useless pyramid scheme, the fact remains that it has arrived and is likely here to stay in one capacity or another.

If you have largely avoided talk of cryptocurrencies such as Bitcoin and Ethereum, whether by design or otherwise, at their simplest, they are digital “currencies” not issued by any bank or government, designed to work as a medium of exchange which uses cryptography to secure its transactions. Transactions are facilitated electronically on a peer to peer basis via Blockchain technology.

In the context of a family law dispute, the existence of cryptocurrency in the matrimonial pool creates several difficult and novel issues. Of foremost concern is the anonymity associated with cryptocurrency. Given its unregulated nature, coupled with the power its owners have to quickly transfer funds between various online ‘wallets’, cryptocurrency presents significant challenges to parties who are seeking information and disclosure with respect to their former partner’s financial position.

Essentially, cryptocurrency is tantamount to cash in family law disputes, in that it is extremely difficult to locate unless you know where to look. For example, Bitcoin implements a ‘wallet’ system which uses sets of encrypted public and private keys for security. Private keys are, as the name implies, kept private (as anyone who holds the private key can generally access and make transfers from the wallet). While public keys may be freely disclosed, they do not themselves contain any personally identifiable information about the owner of the wallet (much like a bank account number). Therefore, people holding and spending cryptocurrency such as Bitcoin can often remain anonymous, entering into transactions by giving out a public key or address which does not identify them.

As discussed in a recent HG article, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 has now been passed in Australia and expected to be made law shortly. This legislation proposes the commencement of a register and further reporting and record keeping requirements for cryptocurrency exchange operators in Australia. Despite this, the difficulty of the disclosure process in a family law dispute will no doubt be magnified by the existence of cryptocurrency.

However difficulty arising from an unscrupulous former partner trying to hide their Bitcoins is not the only potential issue in a family law dispute.

There is legal uncertainty

Due to cryptocurrency being a relatively new revelation, case law on the area is limited. How is evidence concerning the cryptocurrency and virtual transactions obtained? How will Blockchains, smart contracts and other relevant information be disclosed? Tracing the conversion of assets to Australian currency to cryptocurrency to offshore and beyond will be a challenge. We anticipate there will be more Anton Pillar orders sought to seize computers, smart phone and “Internet of Things” devices in the chase for the virtual assets. How is cryptocurrency valued? Is it treated as an asset or financial resource or what? What is the relevant jurisdiction for each cryptocurrency? These are all questions to be tested by the Family Courts in the future. Furthermore, the lack of regulation around cryptocurrency will present difficulties in enforcing orders relating to the cryptocurrency.

Taxation issues

Again, because it is still in its infancy, taxation of cryptocurrency is a relatively untested area. Cryptocurrency owners should not assume that profit on cryptocurrency transactions are not taxable or subject to capital gains tax or GST. For instance in 2016 the Hon Scott Morrison MP Treasurer announced the Australian Government’s commitment to resolving the “double taxation” vis-a-viz bitcoins. These types of issues will certainly have a spill over effect into family law disputes when calculating the matrimonial pool.


The volatile nature of cryptocurrencies has certainly been on display in recent weeks. Cryptocurrencies derive their value from supply and demand and as such they present unique problems when calculating the value of a matrimonial pool and the contributions made by each party.


The prevalence of fraudulent trading practices in many cryptocurrencies creates a further layer of complexity in family law disputes. Cryptocurrencies can be owned in joint accounts, leaving both parties exposed notwithstanding that one party may be in control of the account.   

Despite all the hype around Bitcoin and its anticipated shelf life, the underlying Blockchain technology is being embraced by the financial sector (the RBA and most banks have dedicated Blockchain teams and have invested heavily in the technology); the commercial sector (e.g. ASX) and Government. The Blockchain technology has been described as the 21st Century version of the Model T Ford (Macquarie group’s analyst, Viktor Shvets). We need to get our heads around the technology and its potential as it is not going away nor will it be redundant.

In light of the above concerns, which are no doubt only a snapshot of the potential problems associated with cryptocurrency and other transactions facilitated through Blockchain platforms in a family law disputes, it is essential that you retain the right legal advisor who can assist you with the process.

Stay tuned for ‘Cryptocurrency in family law disputes (Part 2)’ which will consider cryptocurrency disclosure issues in more detail, such as:

  • correctly calling for disclosure of cryptocurrency from your former partner;
  • what to do if your former partner’s business is mining cryptocurrency or accepting it as payment; and
  • whether subpoenas or temporary injunctions are of assistance.

For more information or discussion, please contact Geoff Wilson, Partner and Fraser Bax, Associate of HopgoodGanim Lawyers’ Family Law team.

Key Contacts
Geoff Wilson
Geoff is a Partner and co-manages our Family and Relationship Law practice. He is also a lead Partner of our HG Private practice.
Fraser Bax
Fraser is a Partner in our Family and Relationship Law practice, based in our Brisbane office.

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