Dividing Cryptocurrency and Digital Assets in Ontario Divorces

Digital assets were once considered an emerging financial trend, but now they are part of our daily lives and increasingly at issue in family law. From cryptocurrencies to online banking, social media, and digital media libraries, these assets are becoming pivotal in divorce proceedings, where courts must determine how they should be classified, valued, and divided.

Legal Framework: The Family Law Act

In Ontario, the division of property during divorce is governed by the Family Law Act (FLA). Section 5 of the FLA outlines the equalization of net family property (NFP), specifying that the spouse with the lesser net value is entitled to half the difference. This may include digital assets acquired during marriage.

Are Digital Assets Considered Property?

Courts around the world are recognizing cryptocurrency as a form of property. In Canada, this recognition is echoed in both criminal and civil contexts. Under criminal law, digital assets require specialized warrants for lawful seizure, reinforcing their status as property under the Criminal Code. While Ontario’s appellate courts have not explicitly classified digital assets as “property,” trial-level decisions have treated cryptocurrencies as such in family law and estate proceedings.

In Kostrinsky v Nasri, the Ontario Superior Court (ONSC) recognized cryptocurrency as property in two ways. First, Bitcoin purchased using the other spouse’s funds without consent was deemed subject to a resulting trust, giving the non-consenting spouse a beneficial interest. Second, the Court included the full value of undisclosed Bitcoin in the NFP, affirming that digital assets, even if hidden or improperly acquired, are subject to equalization in divorce.

The ONSC  granted a preservation order over cryptocurrency held in a digital wallet in Kirshenberg v Schneider. Although the Court stopped short of formally declaring the cryptocurrency Ether or other digital assets as “property,” it acknowledged precedents from the United Kingdom and British Columbia that treat cryptocurrency as property for injunctive relief.

Disclosure Obligations and Valuation Challenges

Full financial disclosure in divorce includes digital assets such as cryptocurrency. Spouses must reveal all assets they own or control, including those in digital wallets. Hiding crypto can lead to serious legal consequences.

Valuing these assets is complex due to market volatility, and Ontario law requires valuation as of the date of marriage and the date of separation. While assets acquired before marriage may be deducted, any growth during the marriage will be subject to equalization. Courts may rely on expert reports, transaction histories, or market data to determine fair value.

Legal experts are increasingly weighing in on the importance of identifying and valuing digital assets. According to Anthony Doran and Brenda L. Nightingale in their book Law of Fraud and Related Offences, forensic accountants are sometimes engaged in high-profile cases to trace hidden wallets or blockchain activity. There is growing awareness that digital assets can be used to conceal wealth. In the second edition of The Law of Social Media and Domain Names, Sheldon Burshtein and Antonia Turco point out that because cryptocurrencies are stored across global servers and can be difficult to trace, courts emphasize the need for full and frank disclosure to ensure a fair division of property.

Final Thoughts

Ontario courts are increasingly recognizing digital assets, especially cryptocurrencies, as property in divorce proceedings, which means that, like traditional assets, they are included in the net family property and subject to equalization. Beyond equalization, digital assets may also influence spousal and child support obligations, particularly when they generate income or are used to conceal wealth.

Digital assets raise multifaceted issues associated to their treatment in the family law context, which can involve jurisdictional concerns, as many are stored on servers outside Canada. The ONSC cases demonstrate the courts’ evolving approach to digital assets, including resulting trust claims and preservation orders.

As digital assets become more embedded in everyday life, their treatment in family law will continue to evolve, making full disclosure, accurate valuation, and legal guidance essential in divorce proceedings.