Working Within the Digital Realm
Any asset that is acquired during the time that a couple is married must be divided in a divorce. This is not limited to just physical assets; as the world becomes increasingly digital, so too must digital assets be divided in a divorce. How do you work with assets that cannot be touched?
Digital assets that are present in a divorce bring their own set of unique challenges that must be handled. First, in the event that parties agree to divided digital assets or the court orders said asset division, there must be a means to transfer these digital assets from one party to the other.
Many cryptocurrencies and non-fungible tokens (NFTs) are stored in encrypted digital wallets; however, there are several different websites that host digital wallets, and each digital wallet may hold different assets rather than having everything stored in one convenient place. Depending on the assets that will be transferred, one spouse may have to open digital wallets across various hosting sites.
In addition, online privacy laws are constantly changing and must be adhered to. If transferring assets involves sharing passwords or legally bypassing security features, then there may be additional steps to take to ensure that no one is violating state or federal privacy laws.
Cryptocurrencies operate similarly to the stock market in that they are very volatile; one moment a cryptocurrency could skyrocket in value and then plummet the next. This can make obtaining an accurate value difficult. In order to place an accurate value on your cryptocurrencies, you should speak with your attorney for guidance on asset valuation. You can also consider working with a forensic accountant who understands digital asset appraisal.
NFTs may seem to be more straightforward in value, but there has been much fraud surrounding these assets. Some sellers take it upon themselves to buy their own NFT for large amounts of money in order to manipulate the market into thinking it is worth more than it actually is. Your forensic accountant can help you determine a fair market price for your NFT and can look into the transaction history associated with it.