Bitcoin and Discord: Implications of Recognising Cryptocurrency as Marital Property in Russia

Proposal to recognise cryptocurrencies as marital property faces challenges in Russia.

Igor Antropenko, a member of the Russian State Duma Committee on Industry and Trade, proposed recognising cryptocurrencies as marital property. The draft law aims to protect the rights of spouses in the event of a divorce. However, experts consider the initiative “ineffectual” and point out the lack of mechanisms for identifying digital assets in Russia.

What is the essence of the initiative?

The bill proposes amendments to Articles 34 and 36 of the Family Code of the Russian Federation:

1. Digital currency acquired by either spouse during marriage is considered joint property of the spouses;
2. Digital currency acquired by one spouse before marriage or through gratuitous transactions during marriage is considered the property of that spouse alone.

The accompanying note highlights that in the context of a digitalising economy, Russians increasingly use cryptocurrency as a form of investment and savings.

“The absence of regulation of the legal regime of such assets in family relations and divorce proceedings creates a risk of infringing the property rights of one of the spouses, which is inconsistent with Article 19 of the Constitution of the Russian Federation, which enshrines equality before the law and the court, as well as gender equality,” the document states.

The bill has been sent for preliminary legal assessment to the Russian government and the head of the Central Bank, Elvira Nabiullina.

Expert Commentary

According to Federal Law No. 259-FZ “On Digital Financial Assets,” digital currency has been recognised as property since 2021. However, this definition applies only to decentralised tokens and does not cover, for instance, stablecoins. Nevertheless, if spouses wish to divide bitcoin during a divorce, they have had the opportunity to do so for four years, noted Andrey Tugarin, founder of GMT Legal, in a comment to ForkLog.

Since the initiative is not yet public, it is unknown whether it provides for spouses to voluntarily disclose access to wallets and exchange accounts to each other, and how to proceed if one partner refuses to do so.

The lawyer is confident that no one will voluntarily disclose a list of assets during a divorce, but there are legal mechanisms used by citizens and courts for this purpose. However, mechanisms for identifying cryptocurrency within Russian jurisdiction are still lacking.

“This is because the law still does not regulate the process of organising the circulation of digital currency, there are no official statuses for market participants, and there is no requirement for data exchange. Therefore, it is quite easy for a Russian user to conceal the fact of owning cryptocurrency today, and courts lack sufficient mechanisms for verification,” Tugarin stated.

The expert also emphasised that if one spouse’s cryptocurrency is recognised as the subject of an offence, it is impossible to hold the other spouse equally accountable without evidence of complicity.

When will the initiative take effect?

If approved, the initiative will have no consequences, including social ones. It will remain “ineffectual” until “about ten more regulatory acts” are adopted to create a full-fledged infrastructure in Russia for regulating cryptocurrency circulation, Tugarin pointed out.

“Given current trends and the regulator’s approaches, including those of the Bank of Russia, we will not see such infrastructure before 2027,” he added.

Back in May 2023, a New York resident discovered her spouse’s hidden cryptocurrency holdings during divorce proceedings. A forensic accountant traced undeclared 12 BTC, valued at approximately $500,000 at the time.