Divorce always raises thorny questions of how to divide marital property. In most cases, the remedy is pretty straightforward, requiring a surgical split between the two parties’ assets — although you can’t do that with the family dog or aquarium. But if you thought deciding who gets the dog was complicated, here comes cryptocurrency.

With the crypto wealth accumulation phase still new within many households, and the recent sharp decline in digital assets including bitcoin and ether dinging the confidence of investors who had just seen record highs, the path forward is murky. But for many married Americans, the current price of crypto doesn’t even register as an issue. That’s because the assets are easily squirreled away from an unsuspecting spouse.

“In divorce cases, crypto is creating the same headaches we’ve long seen with offshore accounts, except now the assets can be moved instantly and invisibly,” said Mark Grabowski, professor of cyber law and digital ethics at Adelphi University and author of several books about cryptocurrencies. He added that the problem is that ownership isn’t determined by a name on an account — it’s determined by who holds the private keys.

“If one spouse controls the wallet, they effectively control the assets,” Grabowski said.

Lawyers now have to subpoena exchanges, trace transactions on the blockchain, and determine whether coins were purchased before or during the marriage.

“Without that transparency and given the lack of reporting standards, it’s easy for one spouse to hide or underreport holdings. Courts are still catching up,” Grabowski said.

In theory, though, a crypto divorce should work like any other. Renee Bauer, a divorce attorney who has dealt with crypto splits, says the biggest question couples fight about is simple on the surface: who gets the wallet?

“That question opens the door to a mess of complications that traditional property division never had to deal with,” Bauer said.

The first challenge is figuring out what actually exists.

“A retirement account comes with statements. A house has an address. Crypto may be sitting in an online exchange or in a hardware wallet that one spouse conveniently forgot to mention,” Bauer said.

Tracing it then becomes part detective work and part digital forensics. Once the digital asset is authenticated, hashing out custody comes next.

“Some spouses want to keep the digital wallet intact, especially if they are the one who managed it during the marriage, while others want a clean monetary split,” Bauer said.

Courts are still figuring out the best way to handle this.

“There is also the security piece. If one spouse hands over private keys, they are effectively turning over total control. If they refuse, the court has to decide how to enforce access,” Bauer said.

She recounts seeing one lawyer who didn’t know much about crypto try to give the other spouse credit for the value of the bitcoin in another asset, not recognizing it’s not so simple, nor fair.

“Many divorce lawyers are slow to catch up and don’t even ask for disclosure. In my state of Connecticut, there isn’t a spot for crypto specifically on the financial affidavits. And for some, that could mean missing a valuable asset if they aren’t looking for it,” Bauer said.

Crypto hunters, PIs of digital asset divorce era

One of the few companies that can help locate a missing asset is BlockSquared Forensics. Ryan Settles, founder and CEO of the Texas-based company, says that the need for his services has increased exponentially since he founded his company in 2023. BlockSquared is dedicated exclusively to the crypto aspects of family law and divorce.

If a spouse (generally women, Settles says) suspects their partner is hiding crypto, their attorney may call in BlockSquared, which does anything from simple asset verification to deep investigations, tracing crypto across continents and into the murky world of wallets and exchanges. Settles’ company will then present the spouse with a “storyboard” that traces and timestamps the movement of cryptocurrencies.

Investigating whether one spouse has crypto is becoming increasingly common, he says, “especially folks involved in high-net-worth divorces and individuals with high net worth.”

Ferreting out crypto in a divorce is only going to become more common. Settles noted that millennials hold the highest amount of crypto, and over the next six months, this age group will be approaching peak divorce years, converging with increased crypto holdings.

Another aspect Settles looks at is tax liability for the spouse, making sure that gets addressed during the divorce.

“There are a significant number of tax issues that most people, even attorneys, are not even familiar with,” Settles says, adding that the number of taxable events and reporting requirements from even a single transaction can come as a surprise to even the most seasoned litigators.

“Most attorneys don’t understand it, don’t understand the terminology. There is a whole lot of trust without verification going on,” Settles said.

Many of his cases involve wives who were not only unaware of their husband’s crypto dabbling, but when the assets are finally split, can be socked with a massive tax bill from capital gains.

“Unlike a savings account, the value of crypto can swing wildly in a single day,” Bauer said. “Selling crypto to divide proceeds can trigger capital gains. Holding it can trigger new arguments when value changes,” Bauer added.

Relatively relaxed Internal Revenue Service reporting requirements for crypto have not helped, though they are set to get stricter starting with the 2025 tax year.

“There are so many pieces. There are a lot of attorneys doing nod and smile and pretend to understand,” Settles said.

But companies like his are usually brought in only when there is a good suspicion of a spouse hiding significant crypto assets, he said. With a retainer fee of $9,000 and investigations that can cost $50,000, Settles says his services often cost more than an attorney.

Hard questions about crypto property splits

Roman Beck, a professor at Bentley University, where he directs the Crypto Ledger Lab, says that because this is a relatively new area, it’s best to look at it as courts not dividing the digital wallet but instead the assets the wallet controls.

“The law treats crypto much less exotically than people think. The starting point is simple: for tax and most property-law purposes, cryptocurrency is treated as property, not as money,” Beck said.

In divorce, that means bitcoin, ether, stablecoins, and NFTs acquired during the marriage are usually part of the marital estate, just like a brokerage account or a second home, with how that property is split depending on the state.

“Courts don’t split wallets, they split value,” Beck said.

The real legal question is not “Who gets the wallet?” he said, but ‘How do we allocate the economic value the wallet represents, and who is trusted with technical custody afterward?”

This leaves courts and lawyers to do one of three things: split the holdings on-chain, sell and split fiat, or offset with other assets.

“From a technical point of view, a wallet is just a set of private keys, often spread across hardware devices, mobile apps, or even seed phrases on a piece of paper. You cannot safely ‘share’ a hardware wallet or a private key after divorce,” Beck said.

Another wrinkle in a crypto divorce is the volatility of the underlying asset, with price swings in the currency making it more difficult for couples to agree on timing of a split, both as a couple and for the digital assets. In the past two months alone, bitcoin fell from a high over $126,000 to the low $80,000s, a 35% decline, and saw its year-to-date gains wiped out, with plenty of wild daily swings.

If couples are thinking rationally and not emotionally, among the simplest solutions would be splitting the wallet on a chain to create two wallets for each of the divorced partners so they can continue holding their share of cryptos, or drawing up a legal agreement that gives shares of a wallet to each party.

“They would not have to sell immediately,” Beck said.

However, often one party is not familiar with holding a wallet and thus not comfortable with that solution.

Similar to a house jointly owned which a divorcing couple may not want to bring to the market at a bad time, a couple could also agree to turn over crypto holdings to trusted third party to act as agent on behalf of both and to sell the crypto once the market has improved — once a certain agreed upon minimum value has been reached.

But Beck added that while from an economic and technical point of view there is no barrier preventing a divorcing couple from keeping crypto assets using any of these methods to allocate a legal percentage to each partner and delay liquidation until market conditions improved, both parties need to agree, and “most just want to be done,” he said.

Blockchain ledger transparency and the courts

One positive it that despite crypto’s reputation as a haven of anonymity, other aspects of digital assets work well for divorce proceedings.

“Public blockchains like bitcoin and ethereum are transparent ledgers. Every transaction is recorded forever. In other words, on-ledger data analytics turns the blockchain into a very patient financial witness,” Beck said. “That leaves a perfect audit trail if you know how to read the chain. … The real frontier isn’t the law, it’s the forensics,” he added.

Crypto’s adoption by many Americans — surveys in recent years from Gallup and Pew Research estimate that 14% to 17% of U.S. adults have owned cryptocurrency — is forcing family law to become more data-driven.

“The combination of transparent ledgers and powerful analytics gives lawyers and judges better tools to reconstruct financial behavior than they ever had with cash. The policy question going forward is not whether we can trace, but how far courts will go in requiring that level of scrutiny in everyday divorces,” Beck said.

Still, that doesn’t mean people won’t keep trying to hide assets. Settles says that often within 20 minutes he’ll see movement on the ledgers.

“They’ll start scrambling their assets, moving things, hiding things, moving them to tumblers. It’s quite fascinating,” Settles said.

And traceable.

Go back a decade and most Americans had never heard of Huawei. Today, the Chinese telecom giant is a symbol of how quickly China can dominate a strategic technology sector and in the process create new national security and market threats for U.S. government and industry.

Democratic Senator Mark Warner of Virginia, the top Democrat on the Senate Select Committee on Intelligence, is now worried about another Chinese company that he predicts will eclipse Huawei in both scale and consequence: BGI. It is not building cell towers or smartphones for the 5G era. It is collecting DNA.

“If Huawei was big, BGI will be even bigger,” Warner said at the CNBC CFO Council Summit in Washington, D.C. on Wednesday.

BGI is one of the largest genomics companies in the world. It operates DNA sequencing laboratories in China and abroad. It processes genetic data for hospitals, pharmaceutical firms and researchers across dozens of countries, according to a recent report by the National Security Commission on Emerging Biotechnology.

The company began as a Beijing-based research entity, the Beijing Genomics Institute, tied closely to China’s national genome projects. It later expanded into a global commercial powerhouse, selling DNA sequencing, prenatal testing, cancer screening, and large-scale population genetic analysis, according to an NBC News report.

Through subsidiaries, BGI says it operates in the U.S. Europe, and Japan. In several countries, it helped built national genetic databases and pandemic testing systems.

U.S. intelligence officials believe that global footprint gives BGI access to one the largest collections of genetic data on Earth. Lawmakers have warned that genetic data is not just medical information. At scale, it becomes a strategic asset spurring a “DNA arms race,” according to a Washington Post report. DNA profiles can reveal ancestry, physical traits, disease risk, and family relationships, and when linked with artificial intelligence, the data can also be used for surveillance, tracking and long-term biological research tied to national security, according to the Washington Post’s reporting.

At the CNBC event this week, Warner continued to press for more focus on BGI. “They are hoovering up DNA data,” Warner said. “This level of experimentation on humans and intellectual property theft, we all should be concerned about it.”

Congressional investigators have previously warned that BGI maintains close ties to the Chinese Communist Party and Chinese military, according to a report from the House Select Committee on the CCP. They argue that China makes little distinction between commercial data and state security needs.

The ‘super soldier’ fear

One of the biggest fears tied to BGI and China’s broader biotech push is the possibility of a genetically enhanced soldier. U.S. officials have publicly claimed that China has explored human performance enhancement and military biotechnology. U.S. defense analysts say China’s research spans population DNA collection, military databases, and AI-driven human performance modeling, according to a Wall Street Journal op-ed written by U.S. Director of the Central Intelligence Agency John Ratcliffe in 2020, when he was Director of National Intelligence during President Trump’s first term.

Warner directly referenced those concerns this week.

“It’s terrifying,” Warner said.

Warner described China as a great nation and great competitor, and as a former telecom executive (he was among the founders of Nextel), he said what Huawei was able to execute on — producing good products at inexpensive prices before the U.S. and Western competitors were prepared — is a cautionary tale.

The BGI story looks uncomfortably familiar to Warner.

“Go back in time eight or nine years, and most people had never heard of Huawei,” he said.

Huawei rose by combining massive state support, global market access and aggressive pricing, not only outcompeting Western firms on scale and cost, but positioning itself inside the world’s telecom infrastructure before governments understood the security implications. Huawei was first placed on a U.S. trade blacklist in 2019, which banned U.S. firms from selling some technology to the Chinese tech giant over national security concerns. Chip restrictions on Huawei have since become even stricter.

But Warner said by the time the U.S. moved to restrict Huawei, “[we started to] lose a little.”

Much of the 5G backbone had already been shaped by Chinese technology.

During a separate interview with Javers at the CNBC CFO Council Summit, the Republican Chairman of the House committee on the Chinese Communist Party, Michigan congressman John Moolenaar, said “We’ve seen how they run the play of excess capacity, price manipulation, driving people out of business in different areas; they’re going to continue to run that play,” he said. “We want to be friendly with China, but China is not our friend. They are our foremost adversary,” he added.

The Soviet Union was a military and ideological competitor, but China, in tech domain after domain, Warner says — from telecom and 5G to AI, quantum computing and biotech — is a different kind of competitor.

Warner now sees BGI following a similar model in biotechnology. Like Huawei, BGI scaled rapidly with state support. The Washington, D.C.-based think tank Foundation of Defense of Democracies called upon lawmakers of both parties earlier this year to restrict BGI’s access to U.S. institutions.

Congress has been trying to pass various versions of the BIOSECURE Act, which would limit the ability of Chinese biotechs to operate in the U.S. Some U.S. hospitals and research institutions with ties to Chinese genomics firms are under federal pressure, according to the Associated Press, though some medical professionals within the U.S. say they risk losing key research support for core medical goals. BGI told the AP that the bill is “a false flag targeting companies under the premise of national security. We strictly follow rules and laws, and we have no access to Americans’ personal data in any of our work,” it said.

U.S. intel has moved too slowly, and disrupted key spying alliances

Warner said the U.S. intelligence apparatus has moved too slowly to recognize the biotech threat. He says that intelligence agencies focus too much on foreign governments and militaries, with less attention placed on commercial technology sectors. But in a world where technology supremacy is national security, Warner says more of our intelligence efforts need to reflect this shift.

Only in the past two to three years, he says, has the U.S. seriously expanded spying into AI, semiconductors, and biotechnology. Warner says we need a more “advanced approach” in this area, and he gave as one recent example when China’s largest chipmaker SMIC stunned U.S. officials by producing a six-nanometer chip despite sweeping U.S. export controls. The breakthrough showed that Washington had underestimated both China’s technical qualities and ability to work around restrictions. “We got caught off guard with the SMIC six-nanometer chip,” Warner said.

Warner is also worried that tracking China’s tech rise requires a type of deep cooperation with U.S. allies that the Trump administration has squandered, such as the global intelligence-sharing network called the “Five Eyes” alliance.

Those relationships are now under strain, he said, and key partners including the United Kingdom, the Netherlands, and France have gone public in saying they are reluctant to share intel with the U.S. “They feel like we may be politicizing the intel product and that is not good news for America,” Warner said.

Underlying his concerns about the technology competition with China in areas including AI and biotech is the U.S. ceding the global lead in standards setting. For decades, the U.S. shaped the rules for wireless networks, satellites, and internet infrastructure. That dominance help Americans lead global markets, Warner said, but now China is aggressively positioning itself as the international standards setter.

Warner described the U.S. role in international bodies as one of the “secret sauces” in the era of America’s dominance of the global economy and technology, allowing the U.S. to leverage innovations occurring around the globe, “even if it didn’t arise in America.”

Across technology domains, influencing standards and protocols is critical to not only maintaining a competitive edge but also establishing ethical boundaries. “Will it be us or the Chinese?” Warner said. “The Chinese come in with clearly a less humanist approach. It’s been effective in lots of domains. We see it on standards-setting bodies. China floods the zone with lots of engineers, almost buying off the votes. We’ve got to reengage for American business and government,” he said.