In traditional divorce proceedings, property division typically involves transparent assets such as real estate, bank deposits, and stocks—all of which are relatively traceable. However, the introduction of cryptocurrency into marital estates introduces significant complexities, blurring established legal boundaries. Legal Framework: Cryptocurrency as Marital Property According to notices issued by Chinese regulatory authorities in 2013 and 2021, cryptocurrency is not recognized as legal tender but is classified as a ‘virtual commodity.’ This classification acknowledges cryptocurrency as a form of property interest protected under law, granting holders exclusive rights to manage and trade these digital assets. For cryptocurrency to be subject to division in divorce proceedings, it must first be established as marital property. Under China’s Civil Code, assets acquired during marriage—including投资收益 (investment returns) and personal property gains—are considered joint marital property. Therefore, cryptocurrency accumulated during marriage, whether through joint investment or individual efforts, qualifies for division upon divorce. Judicial Challenges in Cryptocurrency Division Despite legal recognition, cryptocurrency’s decentralized and anonymous nature creates substantial hurdles in divorce cases: Evidence Challenges: The anonymity of digital assets makes it difficult for spouses to prove the existence of cryptocurrency holdings. Without wallet addresses, transaction records, or other crucial evidence, courts may dismiss claims due to insufficient proof. Valuation Difficulties: Extreme market volatility and the absence of standardized valuation methods complicate assessment. Courts often struggle to establish fair value when couples cannot agree on valuation approaches. Enforcement Limitations: Even with favorable judgments, practical enforcement remains problematic. Courts cannot freeze cryptocurrency wallets as they would traditional bank accounts. If the holding spouse refuses to disclose private keys or claims key loss, judicial enforcement becomes virtually impossible. Case Precedents and Judicial Approaches Courts generally respect clear written agreements between spouses regarding cryptocurrency division. When parties establish explicit value conversion mechanisms and division methods in written contracts, courts are more likely to enforce these agreements. Conversely, absent such agreements or when valuation remains ambiguous, courts tend to avoid adjudicating cryptocurrency disputes altogether. Practical Recommendations for Asset Protection Evidence Preservation: Systematically document cryptocurrency holdings during marriage, including wallet addresses, private keys, and transaction histories. Consider professional asset valuation to establish evidence chains. Written Agreements: Draft clear contracts specifying valuation methods and division strategies for cryptocurrency assets. Ensure conversion mechanisms between cryptocurrency and fiat currency are well-defined. Asset Segregation: Maintain separate wallets for personal cryptocurrency assets to prevent commingling with marital property, establishing clear ownership boundaries. Legal Consultation: Seek guidance from attorneys experienced in cryptocurrency matters for agreement drafting, asset classification, and dispute resolution. Conclusion While Chinese courts increasingly recognize cryptocurrency as divisible marital property, practical challenges in evidence collection, valuation, and enforcement persist. Proactive management through documentation, clear agreements, and legal consultation during marriage can significantly reduce future disputes. When mutual agreement proves difficult, early legal intervention during negotiation phases often yields more favorable outcomes than protracted litigation.
