Bitcoin Power of Attorney Requirements

POA Requirements for Bitcoin Custody Access

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

What Power of Attorney Does

Someone wants to plan for incapacity. They understand that a power of attorney allows another person to act on their behalf if they become unable to manage their own affairs. The question of bitcoin power of attorney requirements emerges when they try to apply this familiar legal tool to an unfamiliar asset. Will the document that works for bank accounts also work for self-custody bitcoin?

This analysis covers why power of attorney documents face a gap when applied to bitcoin. Legal authority granted by a POA enables an agent to act in the principal's name. Bitcoin, however, does not recognize names or legal authority. It recognizes cryptographic signatures. The gap between legal authorization and technical capability persists regardless of how the document is drafted.

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What Power of Attorney Does

A power of attorney is a legal document that grants one person authority to act on behalf of another. The person granting authority is called the principal. The person receiving authority is called the agent. When the principal cannot act—due to illness, incapacity, or absence—the agent steps in.

This authority works through institutional recognition. Banks accept the agent's authority because the law says they should. Brokerages honor instructions from agents because their legal departments have approved the process. Government offices recognize agents for tax filings, property transfers, and similar matters. The legal system creates obligations that institutions follow.

Traditional assets respond to legal authority because they exist within operational frameworks. Money in a bank is really just a record the bank maintains. Securities in a brokerage are entries in the brokerage's systems. Real estate ownership is recorded in government registries. In each case, an institution controls access. The institution recognizes the POA and grants the agent access accordingly.

The power of attorney itself is a piece of paper, or increasingly a digital document. It has no direct ability to move money or transfer property. Its power comes from the willingness of institutions to recognize and act on it. Without that recognition, the document would be meaningless.

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What Bitcoin Does Not Recognize

Bitcoin in self-custody exists outside operational frameworks. No bank holds it. No brokerage controls it. No registry records ownership. The blockchain recognizes valid cryptographic signatures and nothing else. Present the correct signature, and the transaction processes. Fail to present it, and nothing happens.

Legal documents mean nothing to the blockchain. A power of attorney is not a cryptographic key. Presenting it to the Bitcoin network accomplishes nothing. The network cannot read documents, interpret legal authority, or verify that one person has been authorized to act for another. It processes math, not law.

This creates a fundamental disconnect. The POA may be perfectly valid under applicable law. The agent may be fully authorized to manage the principal's bitcoin on paper. But without the seed phrase, the PIN, the passphrase, and the technical knowledge to use them, the agent cannot actually move the bitcoin. Legal authority without technical access is authority in name only.

Institutional bitcoin custody is different. If the principal holds bitcoin through a custodial service—an exchange, a custodian, a trust company—then a POA may enable access because an institution stands between the principal and the asset. But self-custody eliminates that intermediary. The agent faces the blockchain directly, and the blockchain does not accept legal documents.

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The Gap That Remains

Even with a POA in place, the agent needs what the principal has: keys. The seed phrase, the hardware wallet, the PIN, the passphrase if one is used—these are the actual requirements for moving bitcoin. A POA might authorize the agent to have these things. But authorization is not the same as possession.

If the principal becomes incapacitated without having shared access materials, the POA alone does not help. The agent has legal authority and nothing to exercise it with. They may be entitled to manage the bitcoin, but entitlement does not create capability. The bitcoin remains locked because the keys remain locked.

Sharing access materials in advance closes this gap but creates others. If the agent receives the seed phrase before incapacity, they have the technical ability to move bitcoin at any time. The principal must trust that the agent will not act prematurely. The POA becomes relevant only for legal protection—proof that the agent was authorized—not for actual access.

The gap reveals that bitcoin custody cannot be fully addressed through legal documents alone. Legal and technical systems run in parallel. Connecting them requires deliberate arrangements that go beyond drafting documents. The principal must think about how the agent will actually obtain access, not just whether they are authorized to have it.

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What Language Cannot Accomplish

Attorneys drafting POAs for bitcoin holders sometimes focus on document language. Should the POA specifically mention cryptocurrency? Should it describe digital assets? Should it reference private keys? These questions matter for legal clarity, but they cannot solve the underlying access problem.

Language that authorizes the agent to manage "all digital assets including cryptocurrency" establishes legal scope. It clarifies that the agent's authority extends to bitcoin. This clarity has value—it prevents disputes about whether bitcoin was covered. But the language does not grant the agent any technical capability they did not already have.

Some POAs include specific instructions about where access materials are stored. This approaches the actual problem. If the document says the seed phrase is in a safe deposit box and authorizes the agent to access that box, the document connects legal authority to physical location. But the document still depends on the information being accurate and the materials being retrievable.

No document language can substitute for the principal actually preparing for the agent's access. The document is a legal wrapper around practical arrangements that must be made separately. Without those arrangements, the legal wrapper contains nothing usable.

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Timing Creates Additional Problems

A durable power of attorney remains effective during incapacity. This is the type typically used for contingency planning. But durability creates a timing question: when does the agent's authority begin, and when does the agent actually need access to keys?

If authority begins immediately upon signing, the agent could theoretically act at any time. Most principals do not want this for self-custody bitcoin. They want the agent to act only if incapacity actually occurs. But determining incapacity is itself a process. Doctors may need to certify it. Family members may disagree. While this unfolds, the bitcoin sits inaccessible if access materials were not pre-positioned.

Springing powers of attorney activate only upon a triggering event, typically incapacity certified by physicians. This addresses the premature-access concern but intensifies the timing problem. The agent cannot act until incapacity is certified. Certification takes time. Meanwhile, bills may need paying, or opportunities may require action, and the bitcoin remains locked.

Neither immediate nor springing powers solve the fundamental problem that the agent needs keys and the principal controls when and how keys are shared. Legal timing and practical timing may not align. The POA addresses legal timing. It does not address practical timing unless the principal has separately arranged for access materials to be available when needed.

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What the Search for Requirements Reveals

Searching for bitcoin power of attorney requirements suggests the searcher expects a legal solution to exist. They want to know what document provisions, what language, what formalities will enable their agent to manage their bitcoin. The search assumes the problem is primarily legal.

The problem is primarily practical. Legal authority is the easier part. Most estate planning attorneys can draft a POA that covers digital assets. The harder part is ensuring the agent can actually access the bitcoin. This requires the principal to share access materials or to create a system for the agent to obtain them at the right time.

Requirements in the legal sense are well understood. A POA needs to comply with state law regarding execution, witnesses, and notarization. It needs to grant sufficiently broad authority. It needs to be durable if intended to survive incapacity. Attorneys know these requirements.

Requirements in the practical sense are not standardized. How will the agent get the seed phrase? Where is it stored? Who else knows about it? What happens if that storage location becomes inaccessible? These questions have no universal answers. Each principal must work out their own arrangements. No legal requirement dictates how this must be done because the problem lies outside the legal system.

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The Two Systems Running Parallel

Legal systems and cryptographic systems operate independently. Law creates authority through documents, courts, and institutional recognition. Cryptography creates access through keys, signatures, and mathematical verification. Neither system automatically connects to the other.

Connecting them requires human bridging. The principal holds both legal identity and cryptographic access. While they are competent, they can move bitcoin using their keys and need no legal authorization. When they become incapacitated, they can no longer act, and legal authority transfers to the agent—but cryptographic access does not transfer automatically.

The bridge between systems must be built deliberately. The principal decides how and when the agent will receive access materials. They may share information in advance. They may place materials in escrow with instructions to release upon incapacity. They may trust a third party to verify incapacity and then provide access. Each approach has tradeoffs.

No approach is purely legal or purely technical. Effective incapacity planning for bitcoin requires thinking in both domains simultaneously. A POA that ignores practical access is incomplete. Practical access arrangements without legal authorization expose the agent to liability. The two systems must be addressed together.

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Conclusion

Searching for bitcoin power of attorney requirements reveals the gap between legal authority and technical access. A POA grants an agent legal authority to act on the principal's behalf. Bitcoin does not recognize legal authority. It recognizes cryptographic signatures.

Document language can clarify the scope of the agent's authority but cannot create technical capability. The agent needs keys, not just authorization. If access materials are not available when incapacity occurs, the POA alone does not help.

Legal systems and cryptographic systems run parallel. Connecting them requires deliberate arrangements by the principal—arrangements that go beyond what any legal document can accomplish. The requirements for effective incapacity planning are both legal and practical, and neither can substitute for the other.

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System Context

Examining Bitcoin Custody Under Stress

Bitcoin Power of Attorney Digital Assets

Does Power of Attorney Cover Bitcoin

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