Bitcoin POA Acceptance by Third Parties

Third-Party Acceptance of Power of Attorney

This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.

Why Traditional POA Language Falls Short

A person becomes incapacitated. Their spouse holds a power of attorney document granting authority to manage financial affairs. The spouse takes the document to banks, brokerages, and other institutions. These entities review the document, verify its validity, and grant access to accounts. Traditional financial institutions have procedures for bitcoin poa acceptance.

That same spouse attempts to use the power of attorney to manage bitcoin holdings. They contact exchanges. They reach out to custody service providers. They present the document. Responses vary from confusion to outright refusal. Bitcoin poa acceptance fails when third parties encounter legal authority over an asset type their procedures were not designed to handle.

---

Why Traditional POA Language Falls Short

Standard power of attorney forms grant broad authority over financial matters. Language includes "all banking transactions," "securities trading," and "management of digital assets." These phrases work for bank accounts and stock portfolios. They create ambiguity when applied to bitcoin custody operations.

An exchange receives a power of attorney. The document grants authority to "manage all digital assets." The exchange's legal team reviews it. They ask questions. Does managing include moving bitcoin to external addresses? Does it include changing security settings? Does it include closing the account? The broad language does not specify what actions are authorized.

Another document grants authority to "conduct all cryptocurrency transactions." A custody service receives this. They interpret it as authorizing trades within the platform. The attorney-in-fact wants to withdraw bitcoin to an external wallet. The custody service denies the request. They claim withdrawal is not a transaction but a custody change. The document's language is too general to resolve the dispute.

Technical terminology gaps create additional problems. A power of attorney mentions "bitcoin wallets" without distinguishing between hot wallets, cold wallets, custodial accounts, or self-custody arrangements. Each type involves different access procedures and risk profiles. The third party receiving the document cannot determine which specific operations are authorized.

---

Exchange Acceptance Policies

Cryptocurrency exchanges operate globally but implement policies jurisdiction by jurisdiction. Some exchanges accept powers of attorney. Others refuse them entirely. Many occupy middle ground with case-by-case review processes that take weeks or months.

An attorney-in-fact submits a power of attorney to an exchange. The exchange has no published policy on POA acceptance. Customer service representatives do not know how to handle the request. The case escalates to legal departments. Weeks pass. The exchange responds requesting additional documentation: notarized copies, apostilles, certified translations if the POA was executed abroad.

Each requirement adds time and expense. The attorney-in-fact complies. More weeks pass. The exchange requests proof of the principal's incapacity. Medical records are provided. The exchange expresses concern about privacy regulations and medical information handling. Legal review extends further. Three months after initial contact, the exchange has not granted access.

Some exchanges maintain explicit policies refusing power of attorney acceptance. Their terms of service state that only the account holder can access the account. They offer no exceptions for incapacity. The attorney-in-fact has legal authority. The exchange's policy does not accommodate it. The bitcoin sits in the account inaccessible regardless of legal documentation.

---

The Specificity Problem

Third parties accepting powers of attorney want specific authority grants. A bank sees "authority to access checking accounts" and knows what that means. A bitcoin custody provider sees "authority over cryptocurrency holdings" and faces interpretive questions.

Does the power of attorney authorize the attorney-in-fact to reset two-factor authentication? To change withdrawal addresses? To modify security settings? To delegate access to others? Without explicit grants for each action, the third party defaults to denial. They claim the POA does not clearly authorize the requested action.

An attorney drafting a power of attorney anticipates this. They create a detailed list of authorized bitcoin actions. The list includes specific technical operations: "reset authenticator apps," "update whitelisted addresses," "authorize wire transfers for fiat conversion." The document becomes pages long. Even with detail, gaps appear when the attorney-in-fact encounters a scenario the drafter did not anticipate.

The principal's bitcoin is held across multiple platforms. Each platform has different operational requirements. A power of attorney specific enough for one platform lacks necessary language for another. The attorney-in-fact needs different POAs for different custodians. Or they need an omnibus document so detailed that third parties struggle to verify which provisions apply to their specific operations.

---

Identity Verification Burdens

Traditional institutions verify power of attorney documents through established procedures. They check state databases. They contact notaries. They review signature authenticity. These procedures work within known legal frameworks.

Cryptocurrency platforms lack equivalent verification infrastructure. An exchange receives a power of attorney executed in a different country. How do they verify its authenticity? They have no relationship with foreign notary systems. They cannot confirm whether the signature is genuine. They cannot validate whether the document complies with the jurisdiction's legal requirements.

Some platforms require the attorney-in-fact to complete the same identity verification the account holder originally completed. This includes submitting identification documents, proof of address, and biometric data. The attorney-in-fact complies. But they are verifying their own identity, not their authority to act for the principal. The platform treats these as separate requirements. Both must be satisfied.

Video verification calls add another layer. The platform wants to see the attorney-in-fact on camera holding the power of attorney document. They want to ask questions about the principal's account. The attorney-in-fact may not know account details if they only recently received authority. The video call becomes an interrogation that focuses more on knowledge verification than legal authority verification.

---

Liability Concerns Driving Denial

Third parties fear liability for honoring fraudulent powers of attorney. Banks have insurance and regulatory frameworks protecting them when they act in good faith. Cryptocurrency platforms operate in less certain regulatory environments. They fear that accepting a power of attorney later proven invalid could expose them to claims.

A custody service receives a POA and honors it. The attorney-in-fact withdraws bitcoin. Later, the principal regains capacity and claims the POA was obtained through fraud or undue influence. They demand the custody service return the bitcoin. The service already released it. Who bears the loss?

Traditional financial institutions have clear answers derived from decades of case law. Cryptocurrency platforms lack this precedent. Their legal counsel advises conservative approaches. When in doubt, deny. This protects the platform but leaves legitimate attorney-in-fact situations unresolved.

Some platforms refuse POA acceptance specifically citing regulatory uncertainty. They claim they cannot determine whether honoring the POA would violate anti-money laundering regulations, know-your-customer requirements, or securities laws. Rather than risk violation, they deny all POA requests pending regulatory clarity that may never arrive.

---

When Self-Custody Removes Third Parties

Power of attorney acceptance problems arise only when third parties are involved. Self-custody bitcoin eliminates third-party gatekeepers. The attorney-in-fact needs only the seed phrase or private keys. No institution needs to accept anything. Access is purely technical.

But this assumes the power of attorney grants the attorney-in-fact the seed phrase. Many do not. The document grants authority but does not provide access materials. An attorney-in-fact holds a valid POA for self-custodied bitcoin. The seed phrase is in a safe deposit box the principal controls. The attorney-in-fact has authority but cannot access the box without the principal's signature. Self-custody did not eliminate the third party; it shifted it to the bank holding the safe deposit box.

Other self-custody arrangements involve hardware wallets with PINs. The attorney-in-fact has the POA. They locate the hardware wallet. They do not know the PIN. The POA grants them authority to manage the bitcoin. It does not grant them knowledge of the PIN. Authority and access remain separate.

---

The Multi-Signature Coordination Failure

An incapacitated principal participated in a multisignature arrangement. They held one key. A business partner held another. A custody service held the third. The arrangement requires two of three signatures to move bitcoin.

The attorney-in-fact presents a power of attorney to the business partner and the custody service. The business partner accepts it and agrees to sign. The custody service reviews their internal policies. After three weeks, they respond that their policy prohibits signing on behalf of account holders even with POA. They claim their terms of service limit account actions to the named account holder only.

The attorney-in-fact has legal authority. One keyholder will cooperate. The second keyholder refuses based on institutional policy. The multisignature arrangement cannot function. Bitcoin remains locked despite valid legal authority and willing cooperation from one party. The third party's refusal blocks access completely.

---

State-Specific POA Requirements

Power of attorney requirements vary by state. Some states require specific statutory language. Others accept general grants. Some require witness signatures. Others accept notarization alone. A POA valid in one state may not satisfy another state's requirements.

A principal executed a POA in California. They become incapacitated while traveling in Florida. The attorney-in-fact attempts to use the California POA to access bitcoin holdings. The Florida-based custody service reviews it. Their legal counsel advises that Florida law governs POA acceptance for transactions occurring in Florida. The California document lacks specific language Florida law requires.

The attorney-in-fact must now obtain a Florida-compliant POA. But the principal is incapacitated and cannot execute a new document. Court proceedings become necessary to obtain guardianship or conservatorship with Florida authority. Months pass. Legal fees accumulate. The original POA is valid but not effective in the jurisdiction where it is needed.

Cryptocurrency platforms operating across state lines face questions about which state's law applies. Is it the state where the principal resides? Where the attorney-in-fact resides? Where the platform is incorporated? Where the servers are located? Legal analysis differs. Conservative platforms apply the strictest interpretation, requiring POAs that satisfy all potentially applicable jurisdictions simultaneously.

---

The Time Delay Problem

Power of attorney review by third parties takes time. Traditional banks complete reviews in days. Cryptocurrency platforms take weeks or months. This creates problems when time-sensitive decisions are necessary.

Market prices are declining. The attorney-in-fact wants to sell bitcoin to preserve value. They submit their POA to an exchange. The exchange begins its review process. Two weeks pass. Prices decline twenty percent. Three weeks pass. The exchange requests additional documentation. Prices decline further. By the time the exchange accepts the POA, significant value has been lost to delay.

Tax deadlines create similar pressures. The attorney-in-fact needs to access bitcoin transaction records to file the principal's taxes. The filing deadline is three weeks away. They submit their POA to the exchange. Standard review takes four to six weeks. They request expedited processing. The exchange has no expedited process. The tax deadline passes. Penalties and interest accrue.

Medical expenses present urgent needs. The principal requires expensive treatment. Insurance covers portions. The principal's bitcoin holdings could pay the remainder. The attorney-in-fact attempts to liquidate bitcoin. Exchange review processes extend for weeks. Medical providers want payment. The attorney-in-fact uses personal credit at high interest rates while the POA review continues. When access is finally granted, the urgency has become financial crisis.

---

Documentation Gaps and Circular Requirements

Third parties requesting POA documentation sometimes create circular requirements. An exchange wants proof of the principal's incapacity. Medical privacy laws prevent disclosure without the principal's authorization. The principal is incapacitated and cannot provide authorization. The exchange refuses to accept the POA without medical documentation. The attorney-in-fact cannot obtain medical documentation without the principal's cooperation.

HIPAA authorizations signed before incapacity may exist. But healthcare providers interpret these conservatively. A HIPAA authorization allows medical information sharing with family. Does it authorize sharing with cryptocurrency exchanges for account access purposes? Provider legal counsel advises denial. The attorney-in-fact cannot obtain the documentation the exchange requires.

Court orders resolving these issues take time. A hearing must be scheduled. Evidence must be presented. Judges unfamiliar with cryptocurrency custody ask questions that reveal the novelty of the situation. Orders get drafted carefully with specific findings. The process takes months. During this time, the bitcoin remains inaccessible despite valid POA and clear incapacity.

---

When Platforms Have No Human Review

Some cryptocurrency platforms operate entirely through automated systems. There is no customer service department. No phone number. No email address that reaches humans. All account actions happen through app interfaces.

An attorney-in-fact needs to access an account on such a platform. They have a valid POA. There is no mechanism to submit it. The app only accepts credentials. The attorney-in-fact does not have the principal's credentials. They try customer support. Automated responses direct them to password reset procedures that require the principal's email access or phone access.

Obtaining email access requires presenting the POA to the email provider. That provider may accept it or may refuse. If they accept it, the attorney-in-fact gains email access. They use that to reset the cryptocurrency platform password. This works only if the platform's password reset does not require additional verification the attorney-in-fact cannot provide, such as answering security questions only the principal would know.

---

International Custody Complications

Bitcoin custody crosses national borders easily. A US citizen holds bitcoin on an exchange incorporated in Malta, operating servers in Singapore, with customer support in the Philippines. Which jurisdiction's power of attorney laws apply?

The attorney-in-fact holds a US power of attorney. The Maltese exchange does not recognize it. They require documents complying with Maltese law or an apostille under the Hague Convention. The attorney-in-fact obtains an apostille. The exchange then claims their internal policy requires Maltese legal review for all POAs. This review costs thousands in legal fees and takes months.

Language barriers compound these problems. The POA is in English. The exchange's legal team primarily speaks Mandarin. Translation services are required. Questions arise about translation accuracy. Certified translators must be found. Each step adds cost and delay. The attorney-in-fact manages this while also managing the principal's ongoing care needs.

---

Assessment

Bitcoin poa acceptance fails when third parties encounter legal authority over asset operations their procedures do not accommodate. Traditional POA language is too broad for technical bitcoin custody actions. Exchanges implement varying policies from acceptance to outright refusal. Review processes extend for weeks or months creating time-delay problems during urgent situations.

Specificity requirements create documents so detailed they become unwieldy or still miss scenarios. Identity verification burdens treat legal authority verification and personal identity verification as separate hurdles. Liability concerns drive conservative denials when regulatory uncertainty leaves platforms exposed to unknown risks.

Self-custody eliminates some third-party gatekeepers but creates others when access materials are stored with institutions. Multi-signature arrangements fail when even one keyholder refuses POA acceptance. State-specific requirements and international complications layer additional barriers. Understanding these dynamics explains why valid power of attorney documents often fail to produce bitcoin access despite granting clear legal authority.

---

System Context

Examining Bitcoin Custody Under Stress

Bitcoin Limited POA Scope

How to Explain Bitcoin Custody to Attorney

← Return to CustodyStress