A family that has accumulated digital assets personally and now wishes to hold them through an entity is proposing something that sounds administratively simple and is not. The corporate framework assumes that assets are held by identifiable custodians, valued by reference to observable markets, and evidenced by statements from a counterparty. Digital assets can satisfy all three of those assumptions, some of them, or none, depending entirely on how they are held.
The questions that follow are not principally legal. They concern custody, record-keeping, valuation and the ability of the entity’s auditors, bankers and administrators to work with what is presented to them. Structures that address ownership without addressing these operate adequately until the first year end, at which point several of them require rebuilding.
Custody determines almost everything else
Where assets are held with a regulated custodian, the entity has a counterparty, a contractual relationship and statements that look like the statements the rest of the corporate world runs on. Auditors can confirm holdings with the custodian, banks can see where the assets sit, and the ordinary control framework — who may instruct, within what limits, with what approvals — maps onto arrangements the custodian already supports.
Where assets are self-custodied, none of that infrastructure exists and it must be constructed. Control of the assets is control of the keys, which raises questions that corporate documents do not usually address: who holds them, under what governance, what happens on the death or incapacity of the holder, and how the entity demonstrates to a third party that it controls assets nobody else is holding for it. These are answerable, and answering them is a substantial part of the work.
Whether the assets sit with a custodian or on keys held by an individual determines what the auditors, the bank and the successors can each be shown.
Valuation, records and audit
An entity holding digital assets must value them at each reporting date on a basis that is consistent, documented and capable of being applied by someone other than the person who chose it: which source, at what time, in what currency, and what is done for assets without a reliable market. Applying a policy chosen after the fact, or varying it between periods, produces accounts that an auditor will question and a bank will treat as unreliable.
Records need to cover the movement of assets as well as the balance. Transfers between wallets, activity through exchanges, and any staking, lending or similar arrangement each need to be recorded when they occur, with a stated treatment. Reconstructing a year of transactions from public ledger data, unlabelled and without contemporaneous explanation, is possible and is slow, and it is the point at which many structures discover that ownership was the easy question.
Onboarding, at the exchange and at the bank
An entity opening an account at an exchange or platform is subject to the same enquiry as at a bank: who owns and controls it, what it does, where the assets originated. Source of funds for digital assets is more demanding than for conventional holdings, because the acquisition may have occurred years earlier, through platforms that no longer exist, without records the client retained. Assembling that history is easier now than it will be later, and it does not become easier by being deferred.
Conventional banking sits alongside this and applies its own view. An institution asked to bank an entity whose principal assets are digital will want to understand the custody arrangement, the valuation policy, the flows expected through the account and the relationship between the entity and any platform it uses. Groups that establish the operational framework first and approach the institution afterwards present a file that can be assessed; those that open accounts first generally find the framework being specified for them, by a counterparty, under time pressure.
This note is general in application and does not constitute legal, tax or regulatory advice. It describes practice observed across institutions and should not be relied upon in relation to any particular holding.