In a landmark decision, South Korea has officially recognized cryptocurrencies like Bitcoin (BTC) as divisible assets during divorce proceedings, marking a significant shift in how digital assets are treated in marital separations. This development, confirmed by the prominent law firm IPG Legal, is poised to impact countless couples navigating the complexities of asset division in an increasingly digital world.
Digital Assets Now Considered Property
On October 10, lawyer Sean Hayes from IPG Legal announced that under Article 839-2 of the Korean Civil Act, all assets acquired during marriage, both tangible and intangible—including cryptocurrencies—are subject to division upon divorce. This clarification is rooted in a pivotal 2018 Supreme Court ruling that categorized virtual assets as property based on their economic value. As a result, couples now have the option to request a court-ordered investigation to uncover their partner’s cryptocurrency holdings, streamlining the process of identifying hidden wealth.
Contrary to the widespread belief that blockchain technology ensures anonymity, it is essential to note that it operates on a pseudonymous basis. While a user’s real-world identity may not be linked to their on-chain addresses, the transactions made on the blockchain are still traceable, allowing for potential asset recovery during legal disputes.
Investigating Hidden Crypto Assets
Hayes, who is the first non-Korean lawyer working within South Korea’s court system, elaborated on the options available to spouses during divorce proceedings. If one partner knows which crypto exchange their spouse used, they can petition the court to access transaction records, revealing the amount of digital assets held. In cases where the exchange is unknown, couples can utilize forensic on-chain investigations alongside bank records to uncover any undisclosed digital assets.
The law now provides two primary avenues for dividing cryptocurrency in divorces: couples can either liquidate their holdings for cash or split the tokens directly. This flexibility reflects South Korea‘s broader commitment to transparency and accountability in the digital asset landscape.
A Step Towards Transparency
South Korea’s decision to integrate cryptocurrencies into marital asset division aligns with its ongoing focus on transparency in the financial sector. In December 2023, the country introduced legislation mandating that high-ranking public officials disclose their cryptocurrency holdings, set to take effect in June 2024. This initiative was largely prompted by a scandal involving a senior political figure accused of concealing $4.5 million worth of Wemix, the native token of the Korean blockchain project Wemade.
Also Read: Bitcoin Options Expiry – $1.1B At Stake As 18,800 Contracts Face Friday Showdown
The scandal raised concerns about potential conflicts of interest, insider information misuse, and money laundering, underscoring the need for stringent regulations in the digital asset space. As a result, South Korea’s government is taking proactive steps to foster transparency and trust in the burgeoning cryptocurrency ecosystem.
As South Korea embraces the recognition of cryptocurrencies as divisible assets, it sets a precedent for other nations grappling with the complexities of digital asset ownership in legal matters. This ruling not only empowers couples going through divorce but also enhances the accountability of individuals in positions of power. With the world of cryptocurrency continuing to evolve, South Korea’s legal framework may serve as a model for others navigating the intersection of technology, law, and personal relationships.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
