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South Korea has recently enacted a significant change in its legal framework regarding the division of cryptocurrency holdings during divorce proceedings. This development allows married couples to address the division of digital assets, which were previously ambiguous under the law.
New Legal Framework for Cryptocurrency in Divorces
According to IPG Legal, a law firm that specializes in South Korean legal matters, the country’s laws now recognize both tangible and intangible assets, including cryptocurrencies, as part of marital property. This change is codified in Article 839-2 of the Korean Civil Act, which permits either spouse to request asset division acquired during the marriage in the event of a divorce.
Virtual Assets as Marital Property
The legal provision that permits the division of assets extends to digital assets such as cryptocurrencies, thereby reinforcing a pivotal Supreme Court ruling from 2018. This ruling classified virtual assets as property due to their recognized economic value as intangible assets. Consequently, cryptocurrencies accumulated during the marriage can be factored into the division of the marital estate.
If one spouse suspects that their partner has undisclosed cryptocurrency holdings, they can initiate a “fact-finding investigation” through the courts. This investigation serves to ascertain the value of these hidden assets, which can significantly influence the overall distribution of property during the divorce proceedings.
Tracking Cryptocurrency Assets
Tracking cryptocurrency holdings in divorce cases can often be less complex than monitoring traditional cash assets, due to the inherent transparency provided by blockchain technology. The blockchain functions as a public ledger for cryptocurrency transactions, making it arduous for individuals to conceal their activities or erase transaction records. Additionally, financial records, such as bank withdrawals, along with forensic analysis, can be instrumental in uncovering any concealed cryptocurrency investments.
Options for Division of Crypto Holdings
Couples navigating divorce proceedings now have the option to either liquidate their cryptocurrency holdings prior to division or split the cryptocurrencies directly, based on their preferences and the nature of the assets in question. This flexibility reflects the growing prevalence of digital assets in financial transactions and has led to an increase in divorce cases involving cryptocurrencies on a global scale.
Global Trends in Cryptocurrency and Divorce
An illustrative case from New York highlighted the potential complications that digital assets can introduce into divorce settlements. In this instance, a woman discovered her husband’s hidden Bitcoin assets during their divorce, employing a forensic accountant who revealed 12 BTC worth approximately $500,000 in an undisclosed wallet. This case emphasizes the unexpected challenges and complexities that digital assets can present in divorce situations.
South Koreans’ Shifting Attitudes Towards Crypto
A recent survey indicated a growing skepticism among young South Koreans regarding the national pension system, with many expressing a preference for cryptocurrencies and stocks as better investment alternatives. The survey found that over three-quarters of individuals aged 20-39 indicated a lack of trust in state-issued pensions. Among respondents actively planning for their retirement, more than half stated they were investing in stocks and cryptocurrencies to build their financial futures.
Notably, even some political candidates in South Korea are entering the cryptocurrency space, with approximately 7% of them declaring ownership of digital assets, according to a study by Yonhap that analyzed their asset disclosures.
Regulatory Changes on the Horizon
The South Korean government is also preparing to enforce stricter regulations regarding token listings on cryptocurrency exchanges. These regulations include measures to prohibit tokens that have been subject to hacking incidents. As part of these efforts, the nation’s financial authorities are set to release new guidelines for virtual asset trading support, which are expected to be published either by the end of this month or early next month. This move is part of a larger trend toward increased oversight in the cryptocurrency landscape, aiming to enhance consumer protection and market integrity.
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