More Bitcoin is now off the exchanges, and courts can’t move those coins without keys.
This shift in custody is contrary to family law. Currency balances are hovering around multi-year lows, with around 14 to 15% of the circulating supply, around 2.7 to 2.8 million BTC.
The rest is held at institutions in vaulted custody or in personal wallets where a 12- to 24-word seed phrase provides control. In divorce, the legal system can divide what it can prove exists or force to appear, but self-control changes those mechanisms.
Courts can order disclosure, and there is a risk of refusal contempt or unfavorable financial rewards, but a judge cannot broadcast a Bitcoin transaction without the private keys.
How courts are adapting to the reality of crypto self-custody
The law is beginning to recognize what technology has already made possible. In England and Wales, the Property (Digital Assets etc) Act 2025 received Royal Assent, establishing that certain digital assets can attract property rights.
The Law Commission’s ‘data objects’ concept supports this shift. Recognition matters for orders, tracking, and title, but it doesn’t conjure up keys.
UK courts have already issued proprietary injunctions over cryptocurrencies in fraud contexts Norton Rose Fulbright documents, and that toolkit is now available in more routine disputes involving the discovery of assets.
Family law lawyers in the UK and US, including firms such as Family law Kabirdescribe playbooks that start with banking and tax information, move to subpoenas, adding on-chain heuristics and device logs, and end with lifestyle evidence when the ledger is quiet.
Ownership is no longer marginal. The UK Financial Conduct Authority reported that as of August 2024, around 12% of UK adults owned cryptocurrencies, equating to around 7 million people. FCA.
The trade press and private surveys indicated that adoption would be higher in 2025, which is helpful in terms of direction, but not a hard anchor. Even if many assets are small, the marginal spouse most motivated to hide will prefer self-control that avoids intermediaries.
For courts, detectability and seizure ability are separated. The analytical stack now rented by subpoenas is more robust when funds hit a KYC platform.
Hardening perimeters and regulatory prospects
Chain analysisThe mid-year 2025 measurements showed thefts exceeding $2.1 billion and followed a shift to stablecoins in illicit finance, demonstrating how on-chain data can flow and identify counterparties once an exchange or broker gets in the way.
That capacity increases the probability of detection, but does not unlock a cold wallet stored offline.
Regulators are tightening the perimeter that can be tightened. In the European Union, MiCA and the Travel Rule, implemented through 2024 and January 2025, standardize originator and beneficiary data when transfers are made through crypto asset service providers.
The UK has advanced plans to formally authorize exchanges and dealers, adding a regulatory lens to the platforms that most frequently interact with consumers.
In the United States, broker reporting for DeFi was nullified in April 2025 and broader IRS crypto reporting won’t begin until 2026, leaving a short-term patchwork. These measures harden the slopes, not the keys.
Two forms of detention explain the gap in enforcement. Custodial accounts act as an intermediary between a person and their coins, allowing courts to freeze and sweeten platform cooperation.
Self-control reverses that model
A seed phrase deterministically generates keys that unlock transactions, and whoever possesses that phrase has spending power.
Disclosure orders remain binding and failure to comply may be punishable, but a refusal will not result in immediate recovery. That is the practical difference that family lawyers must acknowledge in settlement advice today.
The market structure makes legal mathematics more probabilistic. Exchange rate balances at their lowest points in recent years indicate more wealth controlled by key management, not platform management.
The growth of ETFs has concentrated a new portion in professional custody, with multi-party control. Price targets can rise or fall, but the hold migration is independent of directional calls.
If Bitcoin’s off-exchange share rises another 2 to 4 percentage points by the end of 2026, which would be consistent with recent declines, disputed cases involving crypto-active spouses will see higher rates of non-compliance and negotiated discounts that reduce the risk of coins not returning.
Practitioners are already adapting
Typical discoveries now run through bank statements, tax returns for traces of capital gains, exchange subpoenas for KYC files, IP and device logs, and deposit or withdrawal histories, and then into on-chain cluster analysis, as described by NJCPA and other sources from practice.
Where smoke appears but the keys do not, judges can draw adverse inferences and reweight other assets, or award alimony and damages to compensate for concealment. That mirrors the dynamics of offshore cash, with the twist that Bitcoin compresses offshore-like control into a memorized phrase that leaves fewer paper trails.
Joint custody solutions end up in the family’s toolbox. Multi-signature portfolios, for example 2-of-3 setups, allow for shared control by two spouses and a neutral third party.
Commercial providers such as CasaUnchained and Nunchuk market probate and recovery flows, which provide attorneys with a template for prenuptial agreements that direct marital assets into a jointly controlled wallet, with an executor or law firm as a neutral signatory.
The logic is simple: make “us” a policy embedded in the signing threshold, and then let the neutral party act alone to carry out lawful orders, facilitate agreed-upon distributions, or rotate keys if there’s a problem. Based on the FCA baseline, a small adoption share would still cover hundreds of thousands of UK and US households in 2027.
Courts and policymakers also rely on intermediaries to enforce sanctions. OFAC has sanctioned exchanges and mixers that facilitated illicit flows, the U.S. Treasury Department noted, and these actions flow into exchange compliance teams responding to subpoenas faster and with richer metadata.
As that perimeter hardens, expect more evidence coming from platforms, shorter timelines from subpoena to production, and stiffer penalties for non-disclosure.
None of this provides keys to purely captive assets, and so unfavorable rewards, fee shifting, and contempt become the main deterrents rather than guaranteed distribution through transfer.
Some pushbacks deserve a straight answer
“Most people keep coins on exchanges” is less accurate with balances below 15% on platforms and with growth in institutional custody. “Forensics will make hiding rare” is only true if the money hits a broker or CASP.
“Offshore accounts already let people cheat” is an incomplete analogy because self-custody eliminates the bank. The 2025 UK law shows that digital assets are treated as property, but practical control relies on cryptography. Courts can punish non-disclosure, they cannot sign a Bitcoin transaction.
| Metric | Final reference | Source |
|---|---|---|
| BTC on exchanges | ~14–15% of supply, ~2.7–2.8 million BTC | Mint glass |
| Crypto ownership for adults in Britain | ~12% (~7 million adults) as of August 2024 | FCA |
What happens next breaks down into four paths that practitioners and clients must price. First, the keys beat the courts in the sense that higher off-market share increases the speed at which non-cooperation turns into contempt or discounts rather than immediate recovery.
Second, platforms are expanding the perimeter as EU and UK rules, and US tax reporting in 2026, increase visibility when coins hit a broker. Third, joint custody norms are emerging, with prenuptial agreements and wills adopting multisig and escrow key shards so that families can share control and ensure inheritance without posting seed sentences in public.
Fourth, the forensic arms race continues, improving detection on the ramps while leaving the air-gap storage area opaque unless someone cooperates.
The policy lens remains cross-border. Capital controls and sanctions are gaining more influence through intermediaries, and MiCA data standards and the Travel Rule are creating a more uniform paper trail across the regulated sector.
None of these measures diminish a person’s ability to move value across borders through self-determination. That is why courts will continue to rely on remedies that change incentives, not transactions, and why family attorneys will continue to ask for logs, receipts, and OSINT when the ledger is quiet.
If there is one line that captures the moment, it is that regulations harden the slopes, not the keys.
For divorce courts, this means settlements that assume coins can be found where they hit a platform, and remedies that assume they can’t be moved if they don’t.
The keys determine what can be split.
