The Authority-Access Gap in Bitcoin Custody
Legal Authority Without Technical Access
This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.
Why Legal Authority Does Not Produce Access
A probate court issues letters testamentary. A will names a beneficiary. A trust designates a successor trustee. Legal authority is established, documented, and recognized by institutions. These documents are presented expecting Bitcoin to transfer.
The Bitcoin does not move. The legal system has done its work. The Bitcoin network has not responded. Authority exists. Access does not. This gap between legal authority and operational access is a structural feature of Bitcoin custody, not an error in planning or documentation.
Why Legal Authority Does Not Produce Access
Traditional financial assets exist within third-party systems that recognize legal authority. A bank reads a death certificate and releases funds. A brokerage reads probate documents and transfers shares. The institution acts as intermediary between legal process and asset control.
Bitcoin has no intermediary. The network is software running on thousands of computers. That software checks one thing: does this transaction have a valid cryptographic signature? If yes, the transaction is processed. If no, it is rejected. The software does not read wills. It does not recognize court orders. It does not respond to legal documents.
This creates two independent systems. The legal system assigns ownership through courts, wills, and trusts. The Bitcoin network assigns control through cryptographic keys and signatures. These systems do not communicate. They do not reconcile. A person can have complete legal authority over Bitcoin while having zero operational ability to move it.
The gap is not a temporary condition that resolves with enough paperwork. It is a structural feature. No amount of legal documentation produces a cryptographic signature. No court order generates a private key. Authority and access are independent variables that can align or diverge.
The Executor With Perfect Documentation
Recovery in a scenario begins when letters testamentary from the probate court. The will is clear: all Bitcoin holdings pass to the deceased's daughter. Recovery in the scenario has a death certificate, court documents, and proof of identity. Every legal requirement is satisfied.
Recovery involves searching the deceased's belongings and finds a hardware wallet. Recovery involves contacting the hardware wallet manufacturer. Manufacturer policies indicate they do not hold keys and cannot grant access. They suggest using the seed phrase backup.
Recovery involves searching for the seed phrase. It is not found. Recovery involves contacting lawyers, who contact other lawyers. Letters are sent. Months pass. The legal authority remains valid. The seed phrase remains missing. The Bitcoin does not move.
Recovery in the scenario has done everything correctly. The legal process has completed successfully. The gap between authority and access has not closed. The documents that satisfied the court do not satisfy the network.
The Beneficiary Blocked by Technical Barriers
A trust names a beneficiary for Bitcoin held on an exchange. Recovery in the scenario has legal authority to distribute the assets. The result is clearly identified. The trust document is valid and uncontested.
Recovery involves contacting the exchange. The exchange has an inheritance process. It requires the death certificate, trust documents, proof of trustee authority, and proof of beneficiary identity. Recovery involves providing everything.
Exchange processes also require access to the deceased's two-factor authentication. The deceased used an authenticator app on a phone that has been reset. Exchange processes require verification through the original email address. The email provider has its own account recovery process that takes weeks.
Access is eventually granted through exchange processes to the account. Recovery involves initiating a withdrawal to the beneficiary. Exchange processes flag the transaction for review because the withdrawal address is new. The review takes additional days.
Legal authority existed from day one. Operational access required navigating technical systems that operate on their own timelines and requirements. The trust document did not accelerate any of these processes. Authority and access resolved independently.
The Court Order That Changed Nothing
Heirs discover that Bitcoin was sent to an address controlled by someone other than the deceased. They believe this was unauthorized. They hire lawyers. The lawyers obtain a court order declaring the heirs the rightful owners of the Bitcoin.
The court order is legally valid. It establishes ownership. It does not move the Bitcoin. The Bitcoin sits at an address controlled by keys the heirs do not possess. The court order cannot compel the network to recognize the recovery claim. The network processes valid signatures regardless of court declarations.
Recovery may involve legal remedies against the person who controls the keys. They may be able to sue, obtain judgments, or pursue criminal charges. None of these actions move the Bitcoin itself. If the person who controls the keys is unknown, unreachable, or uncooperative, the legal remedy is theoretical while the Bitcoin remains practically inaccessible.
The court did what courts do. The network did what networks do. The gap between legal authority and operational access persists because these are separate systems with separate rules.
The Multisignature Arrangement With Incomplete Authority
A deceased individual participated in a multisignature wallet requiring two of three signatures. The individual held one key. A business partner held another. A custody service held the third.
Recovery in the scenario has legal authority over the deceased's key. Recovery involves locating the hardware wallet containing that key. Recovery even involves the PIN. One piece of the puzzle is complete.
Moving the Bitcoin requires a second signature. The business partner is willing to sign but has misplaced their key. The custody service requires its own verification process, which takes months and involves legal review of the estate documents.
Legal authority in recovery is complete with respect to the deceased's key. It does not extend to the business partner's key or the custody service's key. The multisignature arrangement requires coordination across multiple parties, each with their own authority and access conditions.
Legal authority over one component does not produce operational access to the whole. The gap exists at the intersection of multiple custody participants, each operating under different constraints.
Why the Gap Widens Under Stress
Stress conditions make the authority-access gap worse. Legal authority may be established quickly through existing instruments. Operational access depends on discovery, interpretation, and execution across unfamiliar systems.
Recovery occurs while grieving while learning how Bitcoin works. The result is impatient while technical processes unfold. The lawyer understands estates but not cryptography. The technical helper understands Bitcoin but not probate.
Each party operates with partial knowledge. Legal professionals assume documents will produce results. Technical professionals assume instructions will be followed correctly. The gap between these assumptions creates delays, errors, and frustration.
Time pressure compounds the problem. Estates have deadlines. Beneficiaries have needs. Markets move. The gap between authority and access does not shrink to accommodate external timelines. The network processes transactions when valid signatures appear, not when legal schedules require.
The Professional Who Assumed Wrong
The legal process involves serving as executor for an estate containing Bitcoin. The legal process has handled many estates. Traditional assets respond predictably to legal authority. The assumption is that Bitcoin will be similar.
The legal process involves sending letters to the hardware wallet manufacturer demanding release of the Bitcoin. Manufacturer responses indicate that they do not hold any Bitcoin and cannot release anything. The legal process escalates, threatening legal action. The manufacturer repeats that they physically do not possess the asset.
The legal process involves contacting the Bitcoin network. There is no entity to contact. The legal process involves searching for a Bitcoin customer service department. None exists. The legal process reveals that legal authority, however complete, addresses no one with the power to act.
The mental model formed by traditional assets does not transfer to Bitcoin. Legal expertise in estate law does not include expertise in cryptographic systems. The gap between authority and access is also a gap between professional domains.
When Authority and Access Do Align
The authority-access gap is not inevitable. It closes when operational access materials accompany legal authority. If the executor has the seed phrase, legal authority and operational access can be unified in the same person. The legal documents establish the right to act. The seed phrase provides the ability to act. Both conditions are satisfied.
The gap also closes when Bitcoin is held by institutions that recognize legal process. Exchanges, for example, operate as traditional financial entities. They have compliance departments that process estate claims. Legal authority can produce access through institutional intermediation. The institution translates legal documents into account access.
The gap remains for self-custodied Bitcoin where the access materials are missing, incomplete, or unusable. In these cases, legal authority exists in full while operational access exists not at all. The two conditions are unlinked. No amount of additional legal work bridges the gap because the gap is not legal in nature.
Planning that anticipates the gap addresses both dimensions simultaneously. Legal instruments establish authority. Custody documentation provides access materials. Neither alone is sufficient. Both together close the gap before stress conditions make closure difficult.
Outcome
The authority-access gap is a structural feature of Bitcoin custody. Legal authority is assigned by courts, wills, and trusts. Operational access depends on cryptographic keys and signatures. These are independent systems that do not communicate or reconcile.
Recovery can involve complete legal authority while having zero operational ability to move Bitcoin. A court can declare ownership while the Bitcoin remains inaccessible. Legal documents do not produce cryptographic signatures. Authority does not generate keys.
The gap explains why estates stall despite valid documentation and competent professionals. The legal process completes successfully. The technical process has not begun, cannot begin, or requires elements that legal authority does not provide. Understanding this gap is essential to understanding why Bitcoin custody fails under stress.
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