Crypto Assets for Solicitors - Understanding Crypto Law Education with CryptoXpert Crypto Tax Guides

Crypto assets are now a regular feature in divorce cases, and courts in England and Wales treat them broadly like any other form of property that must be disclosed, valued and, where appropriate, shared. As ownership of Bitcoin, Ethereum and other tokens becomes more common, they are increasingly forming part of the “matrimonial pot” considered on separation.

In UK family law, both spouses have a duty of full and frank financial disclosure, which extends to all digital wealth: exchange accounts, self‑custodial wallets, NFTs, DeFi positions and online trading accounts. Crypto is listed in the standard Form E alongside bank accounts, pensions and other investments, and failure to disclose it can lead to adverse inferences, cost penalties or even the setting aside of an unfair settlement if hidden assets later come to light. Courts now treat cryptocurrencies as “property”, following cases such as AA v Persons Unknown, meaning they can be transferred or sold under property adjustment orders just like more traditional assets. In practice, this means a judge can order a transfer of coins, a sale into fiat with proceeds divided, or an adjustment elsewhere in the balance sheet to reflect one party’s crypto holdings.

Valuing crypto in divorce is challenging because of price volatility and the speed at which portfolios can change. Assets are generally valued at or close to the date of the hearing or settlement, not the date of separation, which can create issues if the market moves sharply in between. In more complex cases, solicitors may instruct experts or use detailed portfolio statements and on‑chain analysis to produce a fair snapshot of holdings and their current worth. Parties and advisers also need to consider tax, liquidity and transaction costs when deciding whether to transfer crypto directly, encash it, or offset it against other assets.

Hiding crypto is a growing concern, as some spouses attempt to move funds into wallets they believe are untraceable. However, the duty of disclosure applies equally to digital assets, and courts can respond robustly if they suspect concealment by drawing adverse inferences, awarding a larger share of known assets to the honest party, or reopening orders if hidden holdings later emerge. Family lawyers are increasingly using blockchain analytics, exchange disclosure orders and forensic accountants to track suspected holdings across multiple wallets, exchanges and jurisdictions. Younger couples in particular tend to have more complex digital footprints, making early specialist advice and careful questions about crypto holdings essential.

For anyone going through divorce who holds crypto, or suspects their spouse does, the core practical step is openness: compiling full records of wallets, exchanges, token types, quantities and transaction histories so that crypto can be factored into a fair, informed settlement. Likewise, if you fear assets are being hidden, noting past conversations about investments, asking targeted disclosure questions and, where justified, seeking specialist forensic input can help ensure digital wealth is treated with the same rigour as property, pensions and other investments.

Crypto assets are now part of ordinary estates in the UK, and wills that ignore them risk leaving value inaccessible or lost altogether.

In England and Wales, cryptocurrency is recognised as personal property, meaning it forms part of someone’s estate on death in the same way as bank accounts or shares. The Property (Digital Assets etc) Act 2025 confirms that digital-only assets, including crypto tokens and NFTs, can be owned, inherited and transferred as property. This clarity means they can be specifically gifted in a will, held on trust, included in the residue of the estate, and must be valued for Inheritance Tax where relevant. Executors now have a clear duty to identify, secure and distribute these assets, and ignoring them can amount to negligence in administering an estate.

The biggest practical challenge is not ownership but access. Unlike a bank account that an executor can reach with a grant of probate, a non‑custodial wallet is effectively useless without the private key, seed phrase or relevant passwords. There have already been widely reported cases where families knew a loved one held valuable crypto but could not reach it because nobody had the keys or exchange login details. Good planning therefore has two parts: making clear legal gifts in the will, and ensuring that someone can safely find the information needed to access the assets when the time comes.

Modern wills should now refer expressly to digital assets, including crypto. Testators can leave specific coins or wallets to named beneficiaries, or simply ensure that digital holdings form part of the general estate to be shared under the standard residue clause. Solicitors increasingly recommend appointing at least one executor who understands digital assets, or giving executors powers to engage specialist help to trace and manage them. It is also sensible to check what options each platform offers, such as “legacy contacts” or in‑platform instructions for what should happen on death.

Security and confidentiality remain critical. Lawyers generally advise against writing seed phrases or full private keys directly into the will, because the will may later become a public document on probate. Better approaches include storing keys in a secure password manager, hardware wallet or sealed memorandum, with the will explaining where that information is kept and who may access it, or using a corporate custodian that can work with executors. Whatever method is chosen, it needs to balance robust protection in life with practical accessibility on death, so that digital wealth does not disappear into the “digital void”.

From a planning perspective, the key message is that crypto should now be treated as a normal part of your financial life when you write or update a will. Listing exchanges and wallets, keeping good records, and regularly reviewing your arrangements as platforms or laws change can make it much easier for executors to do their job and for beneficiaries to receive what you intend.

Crypto fraud, disputes and asset recovery are now a major part of the UK crypto landscape, but real recovery is complex, slow and never guaranteed.

In England and Wales, most crypto frauds are tackled using existing civil and criminal laws rather than a special “crypto fraud” statute. Victims may have civil claims for fraud, breach of trust, unjust enrichment or constructive trust over misappropriated tokens, and they can also report crimes to the police and Action Fraud. The courts treat crypto as property, so victims can ask for injunctions over specific assets and use traditional asset‑tracing tools adapted to blockchains. England has become a popular forum for international crypto disputes because the High Court has been willing to innovate with new service gateways and “persons unknown” orders.

The first step in asset recovery is usually tracing where the crypto went. Specialist investigators use blockchain analytics and exchange records to follow transactions, cluster wallets and identify points where funds touch regulated exchanges, custodians or other choke points. If assets are located at centralised exchanges, lawyers can move quickly for disclosure orders to obtain KYC data and transaction histories, and for proprietary or freezing injunctions to stop further dissipation. These applications are often made urgently and without notifying the suspected fraudsters, precisely to avoid them moving coins before orders are served.

Where there is enough evidence, victims then bring civil proceedings in the High Court, often alongside or in parallel with criminal investigations. Civil claims may seek the return of specific tokens, delivery up of equivalent value, and damages or costs orders against the wrongdoers. In some cases, especially where a fraud is large‑scale or part of organised crime, law enforcement and agencies such as the National Crime Agency use Proceeds of Crime Act powers to freeze and later confiscate crypto, with courts making civil recovery orders over wallets traced to unlawful conduct. Coordination between police, private investigators and civil lawyers is increasingly common in substantial cases.

Not all disputes arise from outright scams. There are growing numbers of disagreements between business partners, issues over mis‑managed investment schemes, exchange or custodian failures, and family or trust disputes involving digital assets. These can involve arguments about who owns particular wallets, whether fiduciary duties were breached, or how digital assets should be shared after relationship breakdown or death. Many such cases settle once tracing and disclosure have clarified who holds what, but the threat of injunctions and litigation often underpins those negotiations.

For individuals and businesses, the most important practical lessons are preventative. Strong operational security, careful due diligence on platforms and counterparties, clear written agreements, and early action at the first sign of a problem all make a big difference to recovery prospects. If fraud is suspected, victims should stop further payments, preserve evidence, report to authorities and seek specialist legal advice quickly, rather than relying on unregulated “recovery” outfits that often target victims a second time.

Cryptoassets raise specific anti money laundering and source of funds questions, because value can move quickly between multiple platforms, wallets and jurisdictions. Your firm should be ready to ask clients where their crypto came from, what platforms they have used, and to obtain supporting evidence (such as exchange statements or transaction histories) before proceeding.

Using Crypto to Buy Property in the UK – Key Points for Solicitors  

An increasing number of clients are funding property purchases with wealth derived from cryptoassets, but transactions are still expected to complete in sterling through the usual client account route. Your role is not to advise on investments, but to manage elevated AML and source of funds risk, coordinate with lenders, and ensure the crypto derived funds are properly explained and documented.  

How crypto typically appears in conveyancing  

For most matters, crypto’s relevance is as the underlying source of wealth, not as a settlement currency. In practice, you will usually see:  

• Crypto disposals made shortly before exchange or completion to generate deposit and balance funds.  
• Historic crypto gains forming part of the client’s general wealth profile (for example, “early Bitcoin profits” now sitting in cash or other assets).  

Your file should tell a coherent story linking historic acquisition and disposal of crypto to the fiat funds arriving in your client account.  

AML and source of funds expectations  

Crypto‑linked funds should trigger enhanced questioning, given the speed and opacity with which value can move across platforms and borders. It is prudent to:  

• Obtain a clear narrative from the client: how they acquired the crypto (earnings, investments, gifts), how long they held it, and when/how it was realised into fiat.  
• Request supporting evidence, such as:  
• Exchange statements and transaction histories showing relevant trades and withdrawals.  
• Bank statements evidencing fiat on‑ramps and off‑ramps linked to the crypto activity.  
• Details of any intermediaries (OTC brokers, payment institutions) involved in converting crypto to cash.  

You should record your source‑of‑funds assessment on file, including any red flags considered and how they were mitigated or resolved.  

Lenders and counterparties  

Mortgage lenders may have specific requirements or sensitivities around deposits originating from crypto. To avoid delays and last‑minute refusals, you should:  

• Check early whether the proposed lender is comfortable with crypto‑derived funds and what evidence they will require.  
• Ensure the client’s explanation and documentation are consistent across you, the lender and (where raised) the seller’s solicitors.  

Where there is a mismatch between the client’s narrative and the documents (for example, unexplained large exchange withdrawals, or abrupt increases in wealth), you may need to seek further clarification or reconsider whether you can safely proceed.  

Tax and scope boundaries  

Realising crypto to fund a purchase can create capital gains tax (and in some scenarios income tax) consequences for the client. You should:  

• Flag that tax may arise when crypto is disposed of to generate cash, particularly if large gains have accrued.  
• Make clear that you are not providing tax advice and recommend that the client obtains advice from a suitably qualified accountant or tax adviser before committing.  

Documenting this signposting helps manage expectations and protects your firm if a client later faces an unexpected liability.  

How CryptoXpert can support your team  

CryptoXpert does not handle client funds or provide legal or tax advice. Instead, we equip solicitors with training, checklists and client‑facing explainers that make crypto‑linked property transactions easier to handle. This includes practical guidance on the questions to ask, the types of documents to request, and how to brief tax and accounting professionals so matters progress smoothly and compliantly.