As a product of e-commerce, virtual currency is widely used in the market economy and its application is becoming more and more extensive. Due to the property attributes of virtual currency, how to define and divide this part of property in divorce disputes has become a focus of attention.

This article conducted a search on the Judicial Documents Network, using [marriage and family affairs] disputes as the case cause and [virtual currency] as the keyword. Currently, only [9] cases were retrieved on the Judicial Documents Network, and none of the cases involved the identification and division of the property.

This article will combine other civil and criminal cases involving virtual currency to discuss the division of virtual currency in divorce disputes from the aspects of the ownership of virtual currency and how to determine and divide its value.

I hope you can learn relevant knowledge, but try not to use it. After all, a harmonious family is the key to success!

1. Legal attributes of virtual currency

Virtual currency has property attributes in law. Article 127 of China's Civil Code stipulates that if the law has provisions for the protection of data and network virtual property, such provisions shall be followed. In specific cases, some courts cited this provision and held that virtual currency belongs to network virtual property, and therefore has property interests and should be protected by law.

For example, in the second-instance civil judgment of the Shanghai No. 1 Intermediate People's Court ((2020) Xinghu01 Minzhong No. 12524) on the unjust enrichment dispute between Li and Wang, the court held that the USDT (Tether) involved in the case is a virtual property on the Internet and is protected by law. The law has a positive attitude towards the protection of virtual property on the Internet. The USDT (Tether) in dispute is a virtual object based on data, which the right holder can exclusively possess, control and use. It is inherently interchangeable and has the characteristics of an object of right.

In addition, in criminal cases, some courts have convicted defendants who used virtual currency as the object of crime of theft, which also confirms the property attributes of virtual currency.

2. Circumstances in which virtual currency is considered common property of the couple

1. Purchase with joint property of the couple

According to the first paragraph of Article 1062 of the Civil Code of the People's Republic of China, during the continuation of the marriage relationship, the income from production, operation and investment belongs to the common property of the husband and wife. During the continuation of the marriage relationship, using the common property of the husband and wife to purchase virtual property is an investment behavior. Therefore, the property and the income generated should be the common property of the husband and wife.

In this case, it is relatively easy for the party who proposes to divide the virtual currency to provide evidence, as long as they can prove that the expenditure was made during the continuation of the marriage. However, if the virtual currency holder purchased it privately and did not inform the other party of the specific circumstances, it would be difficult for the other party to obtain evidence.

2. Income from investment of personal property

Pursuant to Article 25 and Article 26 of the "Interpretation of the Supreme People's Court on the Implementation of the Marriage and Family Code of the Civil Code of the People's Republic of China (I)", the income obtained by one spouse from investing his or her personal property is the common property of the spouses; the income generated by the personal property of one spouse after marriage, except for interest and natural appreciation, should be recognized as the common property of the spouses.

In this case, whether before or after marriage, if one spouse uses personal property to purchase virtual currency and conducts business activities during the marriage ( such as buying and selling cryptocurrency investments ) , the income obtained should be regarded as common property of the husband and wife . However, if one spouse uses personal property to purchase virtual currency before marriage and then puts it aside or forgets about it and does not manage or trade it again, then the natural appreciation of the virtual currency cannot be treated as common property of the husband and wife ( it seems that holding on to the currency has some magical uses... ).

In this case, the virtual currency holder needs to provide evidence to prove that the original funds used to purchase the virtual currency are personal property, and the party applying for division needs to provide evidence to prove that the virtual currency holder has managed the investment during the marriage.

3. Determination of the Value of Virtual Currency

If the court rules that the two parties must divide the virtual currency, how will the price be determined?

1. Determined by the amount of market transactions

In practice, determining the value of virtual currency by market transaction amount is one of the fairer ways. For example, in the first-instance criminal judgment of the Xuhui District People's Court of Shanghai (2018) Hu0104 Xingchu 203, in which Jing Mou was suspected of theft, the court held that the public prosecutor calculated the value of the stolen property involved in the case according to the official selling price of the virtual currency of the victim unit based on the documentary evidence in the case, and the calculation method and the conclusion obtained were objective, legal and valid, and this court adopted them.

2. The amount of the appraisal is determined by the professional appraisal agency.

Determining the value of virtual currency by appraisal is also one of the common methods in practice. For example, in the case of Li, Zhang, and Huang assisting in information network criminal activities in the People's Court of Qingshen County, Sichuan Province (2020) Chuan 1425 Xingchu No. 1, the appraisal by the Computer Judicial Appraisal Institute of Panshi Software (Shanghai) Co., Ltd. found that there were 18 levels of users involved in the "BHB" transaction pyramid scheme, with 7,967 users and a total amount of RMB 86,511,967.3425 in pyramid scheme funds [10,941,570.29 USDTs (market value of approximately RMB 65,649,421.74), 16,845.16883 ETHs (market value of approximately RMB 16,845,168.83), and 160.6950709 BTHs (market value of approximately RMB 4,017,376.7725)].

3. Determined by the amount of negotiation or bidding

In divorce disputes, taking into account litigation costs and time costs, the spouses may also give priority to negotiation or bidding to determine the ownership and corresponding value of the virtual property to be divided.

4. How to divide virtual currency

If virtual currency is to be divided, how should it be divided? Should it be divided directly into virtual currency or be distributed at a discount to RMB?

1. Payment of consideration

Payment of consideration is one of the most common ways to divide property, so both parties can also adopt this method when dividing virtual property, that is, the party holding the virtual currency will compensate the other party with a discount for the virtual currency that should belong to him.

2. Number of divisions

The quantitative division of virtual currency does not affect its transaction and valuation. Therefore, when dividing the property in a divorce dispute, the virtual currency can be divided in quantity, with each party holding their own portion.

Legal Basis:

Article 1062 of the Civil Code of the People's Republic of China: The following property acquired by the husband and wife during the continuation of the marriage relationship shall be the common property of the husband and wife and shall belong to the husband and wife jointly:

• Wages, bonuses, and labor remuneration;

• Income from production, operation and investment;

• Proceeds from intellectual property;

• Property inherited or donated, except as provided for in Article 1063, Paragraph 3 of this Law (property determined in a will or donation contract to belong to only one party);

• Other property that should be jointly owned.

Husband and wife have equal rights to deal with common property.

Article 25 of the Interpretation of the Supreme People's Court on the Implementation of the Marriage and Family Code of the Civil Code of the People's Republic of China (I) : During the continuation of a marriage, the following properties belong to the "other properties that should be jointly owned" as stipulated in Article 1062 of the Civil Code:

(1) income derived by a party from investment of personal property;

(2) Housing subsidies and housing provident funds actually obtained or should be obtained by both parties;

(3) The basic pension and bankruptcy resettlement compensation actually obtained or should be obtained by the man and woman.

Article 26: The income generated from the personal property of one spouse after marriage, except for interest and natural appreciation, should be recognized as the common property of the husband and wife.

Article 1063 of the Civil Code of the People's Republic of China: The following property is the personal property of one spouse:

1. Premarital property of one spouse;

2. The compensation or reimbursement received by one party for personal injury;

3. Property that is determined to belong to only one party in a will or gift contract;

4. Daily necessities for one party only;

5. Other property that should belong to one party.