Written by: Liu Fuqi, Jin Weilin

Introduction

In traditional divorce cases, property division is like a game of open cards—real estate, savings, stocks, everything is traceable. But when cryptocurrency enters the marriage, the rules suddenly become blurred.

"During the marriage, the other party accumulated a large amount of cryptocurrency, which is quite valuable. However, in court, the other party insists on not handing it over. Without any evidence, I can only watch helplessly as those cryptocurrencies, which could have belonged to the couple's joint property, are openly withheld by the other party…"

Such cases are increasingly appearing in courts around the world. With the popularity of cryptocurrency, property division in divorce is facing a new test. Its anonymity and irretrievability make the boundaries of "joint property" unprecedentedly vague.

Legal Definition: Cryptocurrency in Marriage

First, according to the "Notice on Preventing Bitcoin Risks" issued by the People's Bank of China and other ministries in 2013, and the "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation" in 2021, cryptocurrencies and other "virtual currencies" are not recognized as legal tender and do not possess monetary attributes such as legal compensation and coerciveness.

However, the aforementioned "Notices" clearly define them as "virtual goods," which means that although cryptocurrencies are not "money," their property rights as virtual goods should be protected by law. Cryptocurrency holders enjoy exclusive rights to manage and trade specific virtual currencies, thus possessing property attributes similar to virtual goods.

Secondly, to divide any property in a marriage, the primary legal premise is to recognize it as joint property of the couple, and cryptocurrency is no exception.

The corresponding legal interpretations regarding joint property of spouses are as follows:

• Article 1062 of the Civil Code stipulates that the income from production, operation, and investment obtained during the marriage relationship belongs to the couple's joint property.
• The interpretation of the Marriage and Family section of the Civil Code (1) Article 25, Paragraph 1 and Article 26 clearly state that the income from investments made by one spouse during the marriage and the income generated from personal property after marriage should be recognized as joint property of the couple.

From the above legal provisions, it can be seen that whether the cryptocurrency is jointly invested by both parties or obtained from one party's personal operation, as long as it arises within the marriage relationship, its legal nature can be recognized as joint property, thus allowing it to be divided during divorce.

Judicial Practice: How Dilemmas Affect Judgments

Although the legal level has established the principle that cryptocurrency can be divided, its decentralized and anonymous characteristics make it exceptionally easy for one party to hide assets during divorce, becoming a core difficulty in property division.

(1) Difficulty in Evidence

The anonymity of cryptocurrency makes it difficult for the party claiming division to prove the existence of assets. If they cannot provide key evidence such as wallet addresses or transaction records, the court will have no way to ascertain the existence of the assets, thus rejecting the request due to "insufficient evidence."

Relevant cases also confirm this point. In a certain cryptocurrency compensation dispute case (1), since the involved platform had long ceased operations, and both parties failed to provide transfer or transaction records of the cryptocurrency within the stipulated period, the asset status could not be clarified. Therefore, the court determined that one party had insufficient evidence and could not support their appeal.

(2) Difficulty in Valuation

Due to the significant price fluctuations in the cryptocurrency market, there is a lack of unified valuation standards. If the couple fails to return or quantify the division of cryptocurrency within the agreed timeframe, the court will find it difficult to ascertain the valuation results and standards.

Even if one spouse can prove the existence of the assets, whether both parties have agreed on the value of the cryptocurrency and how they agreed will greatly affect the court's final ruling. The following are two common forms:

1. No Agreement or Unable to Negotiate

When the couple fails to reach an agreement on the division of cryptocurrency, due to its legal classification, value assessment, and execution peculiarities, the court usually tends to not handle or support the case.

This judicial attitude is reflected in the "Liu vs. Lei and Geng Housing Sale Contract Dispute Case (2)." Liu claimed to have paid a large portion of the house price with virtual currency, but the court ruled against this part of the payment because he could not prove that both parties had reached an agreement and pointed out that virtual currency transactions are not protected by law.

2. Clear Agreement

In cases where both spouses have reached a clear agreement on cryptocurrency and formed a written document, the court usually supports and respects the couple's self-mediation. However, the premise is that the agreement content is clear and explicit. The following two cases illustrate this from both positive and negative perspectives:

• Case 1 (3): The parties clearly agreed on the amount and payment time of the digital currency discount in the divorce agreement, and the court recognized the agreement as valid, supporting the plaintiff's request.
• Case 2 (4): Although the parties signed a loan contract agreeing to lend RMB, the actual delivery was cryptocurrency, and the conversion relationship with RMB was not clearly defined, the court ruled the contract invalid and rejected the repayment request.

The key difference between the two cases lies in whether a clear value conversion chain has been established. Thus, in judicial practice, if both parties have reached a clear and reasonable written agreement on the value and handling of cryptocurrency, the court may recognize it; conversely, if both parties fail to reach an agreement, due to the lack of a unified valuation standard for cryptocurrency and its legality not being universally recognized, the court tends to not handle or value it.

(3) Difficulty in Execution

Cryptocurrency faces unique challenges in the execution phase: the court cannot directly control private keys like freezing traditional bank accounts. Even if the judgment supports property division, if the holder refuses to hand over the private key or claims "the key is lost," judicial authorities lack effective coercive measures, making it difficult to enforce the judgment.

The contract dispute execution case of Lu vs. Lu (5) exemplifies this dilemma: the judgment clearly stated that Lu should deliver 60 units of a certain coin to Lu or pay 4.83 million yuan in cash. However, during execution, the court found that the respondent had no other executable assets except for over 22,000 yuan in bank deposits. Ultimately, the court could only seize this small deposit and ruled to terminate the execution process due to "no executable assets."

Mankiw's Suggestions: What Should Ordinary People Do?

Faced with the numerous challenges of evidence, valuation, and execution regarding cryptocurrency, to make property division smoother and more secure, one can take the following approaches.

Secure Evidence in Advance:

Given the anonymity and easy transfer characteristics of cryptocurrency, evidence preservation is particularly crucial. It is recommended to systematically organize and secure relevant cryptocurrency assets during the marriage, including wallet addresses, private keys, transaction records, and, if necessary, entrust professional institutions to conduct preliminary assessments of asset value. Physical devices like cold wallets should also be managed to build a complete evidence chain, laying the foundation for subsequent claims or execution processes.

Sign Written Agreements:

It is advisable for both spouses to sign written agreements in advance, clearly stipulating the method of valuing cryptocurrency and specific division plans. The agreement should include specific clauses regarding the method of division, such as whether to use physical division or cash compensation, ensuring that the conversion link between cryptocurrency and currency is clear and unified, along with corresponding performance guarantees. Due to the frequent fluctuations in the overall market value of cryptocurrency, a well-crafted agreement can help avoid situations where the court does not recognize the legality of cryptocurrency and thus does not handle it.

Clarify Property Boundaries:

For parts clearly identified as personal property, it is recommended to manage them separately through independent wallets to avoid confusion with joint property. Establishing a clear asset boundary can protect personal property rights while effectively defining the scope of division in case of disputes, thus avoiding unnecessary conflicts.

Seek Legal Assistance:

Cryptocurrency cases involve both professionalism and legal complexity. It is advisable to consult a professional lawyer with relevant experience in drafting agreements, defining property, and handling disputes in a timely manner to systematically address potential risks and enhance the feasibility of realizing rights.

Conclusion

In the division of marital property, the establishment and handling of cryptocurrency have indeed become a new type of challenge.

Although some courts have recognized the property attributes of cryptocurrency as "virtual goods," its anonymity, price volatility, and execution difficulties still pose significant challenges to case handling.

Therefore, while the marriage relationship still exists, orderly management and written agreements regarding assets, including cryptocurrency, are key to reducing disputes. If both parties find it difficult to reach an agreement on their own, it is advisable to seek consultation and assistance in a timely manner, obtaining legal support during the negotiation phase. Rational negotiation and respect for rules often leave more dignity and respect than going to court.

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