As a seasoned researcher with a particular focus on technology law, I find South Korea’s recognition of cryptocurrency holdings as divisible assets during divorce proceedings to be a significant step towards transparency and fairness in their legal system. This move aligns with my belief that digital assets should not exist outside the realm of traditional property rights.
South Korea now recognizes cryptocurrency holdings as divisible assets during divorce proceedings.
As per a prominent national law firm, IPG Legal, digital currencies such as Bitcoin (BTC) may be considered part of the marital assets, enabling divorcing couples to distribute them equally during their separation.
Digital Assets Considered Property in South Korea
According to a blog post dated October 10th by attorney Sean Hayes, it’s important to note that under Article 839-2 of the Korean Civil Act, all types of assets, whether tangible or intangible, such as cryptocurrencies, obtained during a marriage are subject to division.
The clarification arises from a 2018 Supreme Court ruling which classified virtual assets as property because of their economic worth. This means that during divorce proceedings, either party can ask the court to investigate their partner’s cryptocurrency holdings. This helps in tracing hidden wealth more efficiently.
In contrast to the common perception, blockchain technology isn’t truly anonymous. Instead, it operates under pseudonymity. This means that although a user’s real-life identification is not linked directly to their on-chain (blockchain) addresses, the transactions they conduct can still be traced.
Options for Dividing Cryptocurrency
In a recent post, Hayes, who is the first non-Korean working in the country’s judicial system, stated that if one spouse knows which crypto exchange their partner used for transactions, they could submit a petition to the court seeking records from the platform to verify the value of the digital assets owned.
If a spouse doesn’t know which cryptocurrency exchange their partner used to buy their digital assets, they can use the court to initiate a combined on-chain investigation (which involves tracking transactions on the blockchain) and bank records examination to discover any hidden cryptocurrencies.
According to legal guidelines, Korean couples who own cryptocurrencies have two main methods for distributing them during a separation: they may decide to sell their assets and share the resulting cash, or they could opt to divide the digital tokens themselves.
A notable Asian nation is aligning its approach to marital property with a greater emphasis on openness, by factoring in cryptocurrencies. As early as December 2023, they enacted legislation that will compel high-ranking government officials to disclose their crypto assets from June 2024 onwards.
In response to a scandal that surfaced in May 2023, involving a high-ranking politician hiding approximately $4.5 million in Wemix (the native cryptocurrency of the South Korean blockchain platform Wemade), this directive was issued.
The situation brought up concerns regarding potential conflicts of power, abuse of private data for illicit purposes, and suspicions of illegal funds transfers.
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2024-10-11 08:02