Dealing with legal matters is generally complex, requiring professional expertise but when the new-age phenomenon of cryptocurrencies is thrown into the legal mix, the complexity increases greatly and lawyers must ensure they are right up to speed to achieve a fair and equitable outcome for their clients.
This is particularly important in separation matters where assets need to be divided between partners, according to Parke Lawyers.
With several hundred virtual currencies in existence, and more coming into existence frequently, it is not just important to have knowledge of Bitcoin and Ethereum. Rather, as Parke Lawyers Managing Director and Business Law Specialist, Jim Parke said, having a thorough understanding of legal concepts relating to all cryptocurrencies and a basic working understanding of the blockchain and alternative technology that underlies them is a must.
“Many of these virtual currencies place great emphasis upon the privacy of the asset-owner and are specifically intended to be untraceable, which obviously presents particular challenges for lawyers.”
Parke Lawyers has assisted clients, including cryptocurrency start-up businesses, with commercial issues in relation to cryptocurrency markets.
It has also assisted, and continues to assist, in probate matters where encrypted entitlement to bitcoin has formed part of the estate.
Mr Parke said the practice is keeping up with developments in virtual currencies and enlisting the assistance of IT experts to provide specialised services where needed.
“We have experienced first-hand the difficulty of tracing, identifying and recovering even the most common cryptocurrency assets and know that we have to be very nimble and act quickly in this changing environment.”
“Where a partner has prior knowledge that their partner owns cryptocurrency, that knowledge can be used as a basis to seek specific disclosure in a family law context.
“Where a partner doesn’t have such prior knowledge, the best approach at present may be to insist, and rely, upon sworn declarations as to the nature and extent of each party’s assets, including cryptocurrency assets.
“If such a declaration proves to have been made untruly or incorrectly, that may provide a basis for re-opening a previously agreed division of assets,” he said.
“The critical thing in the family law context,” Mr Parke added, “is for partners to be alive to the possibility that there may be cryptocurrency assets and to seek to protect their interests in relation to such assets as well as they reasonably can. Lawyers who keep up with legal and technological developments in the cryptocurrency space are much better equipped to protect clients’ interests in relation to these rapidly developing virtual assets.”