How to Structure a Legal Crypto Treasury for Your Company - 8 Steps

Many companies – from small businesses to multinationals – are starting to hold cryptocurrency as part of their corporate treasury reserves. High-profile firms like MicroStrategy, Tesla, and Block have famously added crypto (e.g. Bitcoin) to their balance sheets.

However, structuring a legal crypto treasury requires careful planning. Businesses must navigate regulatory uncertainties, implement strong financial controls, and align crypto holdings with their risk management and liquidity needs.

Why Companies Are Using Crypto Treasuries?

Before diving into the “how,” it’s important to understand the “why”. Enterprises and finance teams are exploring crypto treasuries for several strategic reasons:

• Diversification of Reserves: Holding digital assets alongside cash can diversify a company’s reserve assets. Crypto (especially Bitcoin) is seen by some as “digital gold” – a store of value that isn’t directly correlated with fiat currencies.

• Hedge Against Inflation and Currency Risk: With global inflation and currency fluctuations, some businesses view crypto as an inflation hedge or protection against weak domestic currency. For example, Bitcoin’s supply is capped, so supporters argue it can resist inflation effects.

• Growth and Return Potential: Crypto assets have shown high growth. Treasury teams may allocate a small portion of cash into crypto seeking outsized returns over the long term. The potential for significant appreciation is a lure – for instance, a company that allocated surplus cash to Bitcoin in past years could have realized substantial gains as crypto prices climbed.

• Technological and Market Signaling: Embracing crypto can signal that a company is forward-thinking and tech-savvy. Boards have noted it may appeal to younger customers or enhance a firm’s innovation image.

• Facilitating Crypto Transactions: If your business deals with crypto payments – for example, selling products for Bitcoin or paying international contractors in stablecoins – maintaining a crypto treasury makes practical sense. For example: Imagine a global e-commerce company that accepts Bitcoin from customers. Keeping a portion of revenues in Bitcoin as a treasury asset could help them later pay crypto-related expenses or simply hold it as an investment. By holding crypto, they also send a message of confidence to crypto-using customers, potentially attracting more business.

Key Steps to Structure a Legal Crypto Treasury

Setting up a crypto treasury for your business involves more than just buying Bitcoin and calling it a day. You need a structured approach ensuring compliance, security, and alignment with your financial goals. Below are the key steps and considerations:

1. Define Your Treasury’s Purpose and Policy: Start by clearly defining why you are holding crypto and how it fits into your financial strategy. Decide what percentage of your cash reserves to allocate, which crypto assets are permissible, and what the holding period or intent is. Document this in a formal Crypto Treasury Policy approved by leadership or the board. The policy should set exposure limits (e.g. “crypto can be up to 5% of total liquid assets”), outline types of allowed assets (e.g. only Bitcoin and certain stablecoins), and describe how purchases, sales, and custody will be handled. Importantly, decide if the goal is to hedge inflation, facilitate crypto payments, diversify investments, or all of the above.

   For example, a mid-sized tech company might decide in its policy that it will allocate up to 5% of its treasury to crypto primarily as a diversification play and tech-forward signal to investors. The policy could state that only established cryptos like BTC or ETH (and USD-pegged stablecoins for liquidity) are allowed, and require quarterly reporting to the board on these holdings. This kind of clarity in purpose and limits is step one in structuring a legal crypto treasury.

   
   

2. Ensure Legal and Regulatory Compliance: Navigating the legal landscape is crucial – crypto regulations vary widely across jurisdictions, and they are continually evolving. A global company must check the rules in each country it operates:

   
   

   • Corporate Authority & Governance: Verify that holding crypto is allowed under your local corporate laws and get proper approvals. In many cases, the board of directors should formally approve the crypto strategy.

   • Licensing and Regulatory Framework: Simply holding crypto on your balance sheet is generally legal in most countries. But if your treasury activities extend to things like offering crypto services, trading derivatives, or earning yield on crypto, you might trigger licensing.

   • Tax Considerations: Treat crypto with the same tax rigor as any other asset. Different countries tax crypto differently, so plan for tax compliance. Generally, converting crypto to fiat or using crypto to pay for things is considered a taxable disposition (you incur gain or loss on the difference from the purchase price). Even using stablecoins can trigger taxable events – for instance, U.S. tax law treats even 1:1 USD-pegged stablecoins as property, so if there’s any fluctuation in value between when you acquired a stablecoin and use it, that’s a reportable capital gain/loss.

     
     

   On/Off-Ramps and Banking: A practical compliance consideration is how you will move money in and out of crypto (the on-ramps and off-ramps). Decide whether you’ll use a regulated crypto exchange, an OTC broker, or a crypto-enabled bank to purchase your crypto asset. Each option has different onboarding requirements, fees, and regulatory oversight. Also, check if your current business bank is crypto-friendly – many traditional banks do not support crypto transactions and might even freeze funds related to crypto. You may need to find a digital banking provider that specializes in crypto or fintech-friendly banking to handle wire transfers to exchanges or custody providers. If you fill out our contact form we will send you an up to date list of crypto-friendly banks.

3. Set Up Secure Custody and Internal Controls: Unlike cash in a bank, cryptocurrencies are typically held in digital wallets secured by cryptographic keys. You’ll need to decide how to custody your crypto and implement internal controls to prevent theft, loss, or misuse:

   
   

   • Custody Options – Self-Custody vs. Third-Party Custodian: You can hold the crypto in-house (self-custody) or use a professional custodian. Self-custody means the company manages its own wallets and keeps the private keys. This gives you full control, but also full responsibility – if a key is lost or stolen, the assets could be irretrievable. On the other hand, a third-party custodian (such as a regulated crypto custody service or bank) will hold the assets on your behalf, similar to how a bank holds your deposits. Each option carries distinct risks – with self-custody you risk loss of keys or hacks, with third-party custody you risk the custodian’s solvency or honesty.

     
     

     

   • Multi-Signature Wallets and Approvals: Implement segregation of duties just as you would for large bank transactions. In crypto, this is often achieved via multi-signature wallets – requiring multiple private keys to authorize a transaction. For example, you can require that two out of three designated officers (say, the CFO, CEO, and Controller) must sign any outbound transfer. This prevents any single person from moving funds unilaterally.

   • Secure Storage and Cybersecurity: Whether self-hosted or with a custodian, use reputable, security-audited wallet solutions. Enable multi-factor authentication on all accounts. If using hardware wallets, store backup seed phrases securely (e.g. in bank safe deposits or encrypted off-site backups) with access known to more than one trusted person.

   • Internal Accountability: Just as cash handling has strict procedures, institute standard operating procedures for crypto handling. For example, when initiating a crypto transfer, require a documented request and approval record (even if the blockchain records the transfer, you want an internal paper trail for audit). Ensure that every movement of crypto is recorded and authorized as per policy.

   
   

4. Diversify Assets and Manage Volatility: Crypto markets are notoriously volatile. A legal and prudent crypto treasury structure will account for this through diversification and risk management:

   
   

   • Asset Selection: Avoid putting all your treasury allocation into a single crypto asset. Just as traditional treasurers diversify currencies and investments, consider a mix of crypto assets to balance risk.

   • Volatility Controls: Set limits on how much volatility you are willing to accept. For example, you might decide that no more than X% of your total treasury will be in highly volatile crypto, with the rest in stable assets. Some companies also use financial strategies to manage volatility: dollar-cost averaging when buying, or using hedging instruments to offset price swings.

   • Liquidity and Cash Flow Needs: Never compromise your ability to meet operational expenses. That means a portion of your crypto treasury should be readily convertible to fiat when needed. Stablecoins are useful here since they are crypto that can be quickly exchanged for cash and often accepted by crypto-friendly banks or payment processors. It’s wise to regularly convert a portion of crypto holdings into more liquid forms (stablecoins or fiat) to maintain a sufficient cash buffer for expenses.

   • Example of Diversification: Suppose a global manufacturing company decides to hold $10 million equivalent in crypto as part of its treasury. It might allocate $5M into Bitcoin as a long-term reserve asset, $3M into USD-pegged stablecoins to use for day-to-day liquidity or quick conversion when needed, and $2M into Ethereum to experiment with decentralized finance or because it plans to accept ETH from certain clients. Over time, if Bitcoin’s value skyrockets and overshoots the allocation percentage, the company can rebalance – selling some BTC for more stablecoin or fiat – to stay within its risk tolerance. This approach follows a key principle: don’t rely solely on one asset; diversify to enhance stability while still capturing the benefits of crypto.

     
     

     

     
     

5. Accounting and Reporting Practices: Incorporating crypto into your books brings accounting challenges. Proper accounting is part of keeping your crypto treasury “legal” and transparent for auditors, investors, or regulators:

   
   

   • Accounting Classification: Determine how crypto assets will be classified on your balance sheet. This can depend on jurisdiction and accounting standards.

   • Financial Reporting and Disclosures: If you are a public company or seeking investors, be prepared to disclose your crypto holdings and the risks associated.

   • Audit Trail and Controls: From an auditing perspective, holding crypto can raise questions of existence (prove you have the coins), valuation, and control. Strengthen your internal controls over financial reporting to address these.

   • Tax Reporting: We touched on tax earlier, but from an operations standpoint, ensure you have a system to track cost basis and fair market value at transaction times for all crypto movements. Every sale of crypto, and every payment made in crypto, likely triggers a taxable gain or loss in most jurisdictions. For example, if you pay a vendor 1 BTC for services, and that BTC had increased in value since your company acquired it, you have a gain that must be reported. Keep detailed records of these values to produce accurate tax filings.

   
   

6. Integrate Crypto Payments and On/Off Ramps: Part of structuring a crypto treasury is deciding how it will interact with your company’s operations. Will you use the crypto to make payments or accept it as revenue? If so, plan the mechanics:

   
   

   • Using Crypto for Payments (Payables): Some companies want to leverage crypto to pay vendors, contractors, or even employees. This requires ensuring the recipients are able and willing to accept crypto and understanding the implications. Check if such payments are allowed by local law too – for instance, some countries don’t allow salary payments in anything other than the official currency for employees.

   • Accepting Crypto from Customers (Receivables): If you take crypto as a form of payment from clients, decide if you will hold those funds in crypto or convert to fiat immediately. Many companies immediately convert to avoid volatility risk, using payment processors or exchanges as an off-ramp. Others might keep some on the books if it aligns with their treasury strategy.

   • Practical Example – Paying a Supplier in Crypto: A manufacturing business sources some materials from a supplier in another country. International bank transfers were slow and costly, so the supplier agrees to accept payment in USDC. The corporate treasury holds, say, $1 million in USDC for such purposes. When an invoice is due, the company sends the equivalent USDC from its treasury wallet to the supplier’s wallet – even if this happens on a weekend, the payment arrives within minutes, illustrating a major advantage of crypto. The company benefits from instant, 24/7 cross-border payment capability. Meanwhile, because USDC is pegged to USD, both parties avoid exchange rate risk. The company’s treasury policy treated USDC as part of its liquidity reserve, and accounting recorded the payment just like a USD payment (with no forex conversion needed).This example shows how a digital asset (stablecoin) can serve a practical business payment need.

     
     

7. Partner with Crypto-Savvy Banks and Providers: The ecosystem of services around crypto treasuries is growing. While we touched on finding a crypto-friendly bank for transactions, also consider other partners:

   
   

   • Digital Asset Custodians/Banks: Aside from traditional banks, there are now digital asset banks and custodians that cater to institutional crypto holders. They can provide a one-stop solution: secure custody, portfolio management tools, and easy conversion to fiat. Fill out our contact form to get an up to date list of such providers.

   • Treasury Management Platforms: Some fintech startups offer crypto treasury management software – tools that help track your crypto portfolio, automate reporting, monitor prices, and even handle multi-signature coordination. Using such tools can reduce manual workload and errors.

   • Insurance Providers: Explore crime insurance or custodial insurance for digital assets. A number of insurers now underwrite policies for crypto theft or loss. The coverage might be limited and premiums high, but for larger treasuries it could be worthwhile as a backstop. If using a third-party custodian, see if they carry insurance and if you’re covered under it.

     
     

8. Monitor, Adapt, and Document: Finally, recognize that crypto is a fast-moving domain. New risks, regulations, and opportunities will emerge regularly. Treat your crypto treasury as a dynamic program that requires ongoing oversight and updates:

   
   

   • Policy Reviews: Schedule periodic reviews (e.g., annually or semi-annually) of your crypto treasury policy. Update it if needed to reflect new laws or changed risk appetite.

   • Stay Informed: Keep your finance and legal team in the loop on crypto news. Major regulatory developments (like a government announcing new reporting requirements) should be caught early.

   • Risk Monitoring: Continuously monitor the risks and performance of your crypto assets. This includes price risk (if one asset becomes too volatile or underperforms, reconsider its role), counterparty risk (keep an eye on the stability of any exchange or custodian you use.

   • Transparency and Documentation: Keep documenting everything. If regulators ever inquire or if you undergo an audit (internal or external), a well-documented history of decisions, transactions, and approvals will prove that your company handled its crypto treasury responsibly and legally.

   • Flexibility: Finally, be willing to adjust strategy. Maybe you started with one asset and find another suits your needs better – update your approach accordingly, with proper approvals.

   
   
   
   

Final Thoughts

A well-structured crypto treasury can give your company a modern edge – from financial flexibility and diversified assets to faster global payments. But it must be done legally and prudently. By following the steps above – defining a clear policy and purpose, adhering to regulations, securing assets with robust controls, diversifying and managing risks, and integrating crypto smoothly into your financial systems – your business can safely navigate this new frontier of finance.