Bitcoin and Taxes: Global Crackdown Meets Divorce Drama

Bitcoin Between Tax Authorities and Family Law: A Digital Challenge with Two Faces

The tax and legal treatment of Bitcoin is developing into a flashpoint for legislators and courts worldwide in 2025. While tax authorities in at least four countries are tightening their regulations, family courts are grappling with a new phenomenon: wealthy spouses are increasingly concealing their crypto holdings in divorce proceedings. The digital nature of Bitcoin makes it the perfect hiding place—but also a legal trap.

The Facts

In February 2025, four countries initiated or announced changes to their crypto tax laws. The Netherlands took a particularly aggressive approach: on February 12, the House of Representatives passed a bill providing for a 36 percent capital gains tax on unrealized gains from savings and liquid investments, including cryptocurrencies. While the proposal found a majority with 93 of 150 votes, it faced massive criticism^[1]. The Dutch cabinet subsequently announced a revision: "There is a lot of criticism of the Actual Return Act. We are not deaf to it... The law must be changed," a government spokesperson explained^[1].

In Israel, the Israeli Crypto Blockchain & Web 3.0 Companies Forum launched a lobbying campaign to reform crypto tax laws. Forum leader Nir Hirshmann-Rub pointed to broad public support for relaxing laws on stablecoins and tokenization, as well as simplifying compliance. He emphasized that "more than 25 percent of the population has dealt with cryptocurrencies in the last five years and more than 20 percent currently hold digital assets"^[1].

Hong Kong announced it would amend the Inland Revenue Ordinance to implement the OECD's Crypto-Asset Reporting Framework (CARF)—a global exchange standard for crypto tax data to combat tax evasion^[1]. Vietnam proposed a 0.1 percent income tax on transaction value for crypto transfers through licensed service providers, while normal value-added taxes would not apply^[1].

Parallel to these tax developments, lawyers specializing in family law are observing a growing phenomenon: wealthy spouses are increasingly concealing their Bitcoin and crypto holdings in divorce proceedings. Alex Breedon, partner at Withers law firm, reported cases where crypto assets worth several million pounds were uncovered. The "most productive locations" are account statements, public crypto ledgers, and forensic examination of physical devices^[2].

In one documented case, a wife became suspicious due to handwritten notes with long number sequences and obtained court disclosure and freezing orders against her husband and a crypto exchange. The man then admitted to actually holding crypto assets, but justified himself by saying they "were old and there were no real transactions anymore"^[2].

Peter Burgess of Burgess Mee law firm sees crypto as a "new manifestation of an old problem": "People used to park their money in offshore trust structures, companies and the like; that of course still happens, but increasingly we see it happening in crypto." He predicts that the number of such cases will increase significantly over the next ten years^[2].

In Germany, Bitcoin in divorce cases is treated like other assets. Under the statutory community of accrued gains, it is calculated how much wealth both partners have gained between marriage and service of the divorce petition. Attorney Christian Solmecke explains: "Whoever has gained more during this time must then give the other half of this gain." Due to strong price fluctuations, it can happen that Bitcoin is valued very highly on the reference date but loses significant value by the end of the proceedings—"expensive bad luck" for the supposedly wealthier partner^[2].

If concealment is suspected, a statutory right to information applies. "If he conceals Bitcoin, he can also be criminally liable for procedural fraud," Solmecke warns. However, it is not certain that such concealment will be noticed: "For example, it is possible to move the wallet to a USB stick and thus hide it 'offline'"^[2].

Analysis & Context

The parallel developments in tax law and family law reveal a fundamental dilemma of Bitcoin adoption: the more attractive Bitcoin becomes as a store of value, the greater the interest of authorities and courts in transparency—and simultaneously the temptation to conceal. The digital nature of Bitcoin, originally conceived as a feature for financial sovereignty, is now becoming a problem for legal systems that depend on transparency and traceability.

The worldwide tightening of tax laws follows a clear pattern: governments want to secure the tax base, while Bitcoin holders are increasingly recognized as a relevant wealth group. The Dutch idea of a tax on unrealized gains is particularly noteworthy—and dangerous. It would force investors to sell Bitcoin just to settle the tax burden, which fundamentally contradicts the long-term holding principle. However, the public backlash shows that such overreach faces political resistance.

The divorce issue, on the other hand, is more subtle and will intensify. The fact that self-custody wallets on USB sticks or hardware wallets leave no automatic trace in banking systems makes Bitcoin the ideal hiding place. At the same time, blockchain transactions are traceable in principle—once an address is assigned to someone, their entire transaction history is exposed. Forensic blockchain analysis is therefore becoming a standard tool in asset disputes. The criminal consequences in Germany—procedural fraud—should be understood as a clear warning.

In the medium term, this development will increase compliance requirements for Bitcoin holders. Those who believe today that they can operate in a legal gray area will tomorrow be confronted with back taxes and criminal proceedings. At the same time, the diversity of national approaches shows that a global standard is still far off—which means additional complexity for internationally active Bitcoin holders.

Conclusion

• The worldwide tightening of crypto taxation is irreversible—Bitcoin holders must expect increasing tax transparency and higher compliance requirements

• Concealing Bitcoin in divorce proceedings can have criminal consequences, particularly in Germany where criminal liability for procedural fraud threatens

• Self-custody offers protection from confiscation but makes forensic blockchain analysis a standard tool in asset disputes—complete anonymity is an illusion

• The volatile valuation of Bitcoin can become "expensive bad luck" in German divorce proceedings if the reference date value is significantly above the payout value

• For long-term Bitcoin holders, professional tax and legal advice is becoming increasingly indispensable to avoid conflict with tightening regulations