The South Korean Supreme Court, and now South Korea’s legislature, have made it clear that cryptocurrencies are marital property which are subject to property division during a divorce. Under the new law, South Korean spouses can claim a right to distribute cryptocurrency, such as Bitcoin holdings, during divorce proceedings.

Bitcoin and Bibimbap

South Korean divorces can be different from Florida divorces. For example, Florida is a no-fault state. But unless a married couple agrees to divorce by mutual consent, South Korea is strictly fault-based. This means that a party must prove adultery, desertion, extreme maltreatment or the whereabouts of the spouse have been unknown for three years to obtain a divorce.

South Korean divorces have been different from Florida divorces for another reason until recently, such as how to treat cryptocurrencies.  Most Americans are familiar with cryptocurrencies such as Bitcoin and Ethereum. They are virtual currencies that use cryptography for security and operate on decentralized networks known as blockchains.

Cryptocurrency and other blockchain technologies have grown in recent years. Bitcoin is the most well-known cryptocurrency, and is currently valued at around $63,126. Under a new South Korean law, both tangible and intangible assets can be divided during a divorce:

Article 839-2 of the Korean Civil Act provides that a spouse may request a division of marital assets accumulated during the marriage upon the divorce in Korea.

This provision encompasses any “property” acquired during the marriage, including both tangible and intangible assets. Additionally, a recent Korean Supreme Court decision confirmed that cryptocurrency and other virtual assets, including Bitcoin, constitute “property” due to the recognized economic value as an intangible asset. Accordingly, any form of cryptocurrency held by a spouse during the marriage may be considered part of the marital estate if acquired during marriage in South Korean.

If a party is aware of cryptocurrency exchange was utilized, a Korean court can issue a fact-finding investigation or an order to obtain financial transaction records to verify the amount of cryptocurrency. In cases where a party is unaware of which exchange is being utilized, analyzing a spouse’s bank withdrawal records and other creative means of forensic investigations can trace transactions related to cryptocurrency exchanges.

Florida and Cryptocurrency

I have written about property division in Florida before. In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

While there is no specific case addressing the topic, under Florida’s equitable distribution statute, marital assets include as those acquired during the marriage, regardless of which party holds title. Additionally, a Florida appellate court last year approved a trial court’s equitable distribution of bitcoins and further authorized deducting Bitcoins from a Former Husband’s original share of Bitcoins, to reimburse the Wife for the cost of recovering the Bitcoin hard drive.

A Cryptocurrency Armistice

Under South Korean law, when it comes to the actual division of cryptocurrency during a divorce, you may have the option to sell the holdings at the market value at an agreed time and divide the proceeds between the parties, or alternatively, simply divide the cryptocurrency holdings between the spouses, retain your interest and hope it appreciates. However, you should always consider the volatility of cryptocurrencies -meaning the price can change quickly in a very short time, making it possible for you to experience big gains or losses.

In some respects, tracking cryptocurrencies may be easier than keeping track of cash. That’s because you may be able to trace trades. blockchain technology preserves all transactions and does not allow external factors to modify or delete entries. Bank withdrawal records and other forensic investigations may allow for the discovery of unknown sources of crypto holdings.

The Korean Law Blog article is here.