POA Bitcoin Custody Ambiguous as a Drafting Gap

Ambiguous Power of Attorney for Bitcoin Access

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

How POA Documents Are Drafted

Someone holds a power of attorney that may or may not cover bitcoin. They encounter uncertainty about whether the document grants authority over self-custody bitcoin assets. The question of whether POA bitcoin custody ambiguous language actually authorizes action surfaces when the agent needs to act. The principal is incapacitated and cannot clarify. The document exists but its application to bitcoin remains unclear.

This analysis addresses how power of attorney language often fails to clearly address bitcoin custody. Documents drafted before bitcoin existed or without bitcoin in mind use general language that may or may not include it. Even documents attempting to address digital assets may leave ambiguity about self-custody specifically. The gap between document language and custody reality creates uncertainty about whether an agent has authority to act.

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How POA Documents Are Drafted

Powers of attorney typically grant authority over categories of assets. Common categories include real property, financial accounts, investments, and personal property. The document may list specific powers for each category or may grant broad authority over all property. The language varies by state law, attorney practice, and form used.

Older documents were drafted before bitcoin existed. Their categories do not contemplate cryptocurrency. A document from 2010 listing "bank accounts, investment accounts, and securities" does not mention bitcoin because bitcoin was not a consideration when the document was written. Whether these older categories include bitcoin depends on interpretation.

Newer documents may include references to digital assets. Some state laws now require or encourage inclusion of digital asset provisions. Standard forms may include language about electronic accounts, digital property, or cryptocurrency. Whether this language covers self-custody bitcoin specifically depends on how the provisions are worded.

The gap appears because drafters often use familiar categories without considering novel assets. An attorney preparing a POA may not know the principal holds bitcoin. Even if they know, they may not understand how self-custody differs from exchange accounts. The document reflects what the drafter understood, which may not match the principal's actual holdings.

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Ambiguity in Common Language

Certain common phrases create ambiguity when applied to bitcoin. "Financial accounts" suggests accounts at institutions. Self-custody bitcoin is not held at an institution. Does the phrase include it? The answer is not obvious.

Language about "investments" or "securities" creates similar questions. Bitcoin may be held as an investment, but it is not a security in the traditional sense. Whether investment-focused authority extends to bitcoin depends on how broadly one reads the term. Different readers may reach different conclusions.

Broad grants like "all my property" seem to include everything. But courts sometimes require specific grants for certain powers. Moving bitcoin requires access to private keys—essentially accessing and using confidential information. Some POA documents separate informational powers from financial powers. Which category controls when the information is the means of financial control?

References to "digital assets" may seem clear but create their own questions. Does digital assets mean the same thing as cryptocurrency? Does it include the seed phrase, which is information rather than an asset? Does it cover hardware wallets as physical devices? The term digital assets groups many different things that may need different treatment.

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Self-Custody Creates Special Ambiguity

Self-custody differs from other forms of holding assets. Bitcoin at an exchange involves an account relationship. The POA agent contacts the exchange, presents documentation, and requests access. The exchange decides whether to honor the POA. This process resembles traditional third-party relationships.

Self-custody involves no institution. The agent does not present documents to anyone. They need the seed phrase or hardware wallet access. The question is not whether an institution will honor the POA but whether the agent has authority to use cryptographic materials belonging to the principal.

Using a seed phrase means accessing confidential information. Some POA documents specifically address access to confidential information or digital credentials. Others do not. An agent with authority over financial assets may or may not have authority to access the credentials that control those assets. The document may be silent on this specific question.

The physical aspects of self-custody add another layer. A hardware wallet is a physical device. Authority over personal property might include it. But the device is useless without the PIN, which is knowledge in the principal's mind. The POA grants authority over property but cannot grant access to knowledge. The ambiguity extends beyond the document to the nature of what the agent needs.

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When Ambiguity Becomes a Problem

Ambiguity may not matter while the principal remains capable. If questions arise, the principal can clarify. They can tell the agent what the POA covers and provide access materials. The document's gaps get filled by the principal's direct involvement.

Incapacity removes this option. The principal cannot clarify ambiguous language. The agent faces the document as it exists, with whatever gaps it contains. Questions that could have been answered now have no one to answer them. The ambiguity becomes a fixed problem.

The agent then faces a choice. Acting without clear authority risks liability if their interpretation is wrong. Not acting means the bitcoin sits unmanaged while the principal's affairs require attention. Either choice carries risk. The ambiguity creates a paralysis where action and inaction both have potential consequences.

Third parties may also raise questions. Family members may dispute whether the POA covers bitcoin. Future beneficiaries may claim the agent exceeded their authority. Even if the agent believes they have authority, others may disagree. The ambiguity invites conflict that clearer language could have prevented.

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Institutional Versus Non-Practical Contexts

When a POA is presented to an institution, the institution decides whether to accept it. Banks have policies about POA documents. They review the language, check for validity, and make acceptance decisions. If they accept, they provide access. If they reject, they explain why. The institution's decision creates clarity even if the document is ambiguous.

Self-custody has no accepting institution. No one reviews the POA and decides whether it applies. The agent interprets the document themselves and acts on their interpretation. No external party validates their reading. If their interpretation is wrong, they may not learn this until challenged later.

This difference shifts the ambiguity problem. With institutions, ambiguity gets resolved at the point of presentation. The institution accepts or rejects, and the agent knows where they stand. With self-custody, ambiguity persists until someone challenges the agent's actions. The agent may act for years before learning their interpretation was disputed.

The lack of institutional validation also means no clear record of authority being accepted. An institution that accepts a POA creates documentation. Self-custody actions leave no such trail. The agent may have difficulty proving they acted under valid authority if questions arise later.

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State Law Variations

Power of attorney rules vary by state. Some states have adopted uniform laws that specifically address digital assets. Others rely on older statutes that do not mention them. The legal framework around the POA affects how ambiguous language gets interpreted.

States with digital asset laws may define terms like "digital asset" in ways that include or exclude self-custody bitcoin. These definitions can resolve some ambiguity, or they can create new ambiguity if the definitions do not clearly cover the situation. State law provides context but may not provide answers.

An agent acting across state lines faces additional complications. The principal may have created the POA in one state while holding bitcoin that touches multiple jurisdictions. Which state's interpretation applies may itself be ambiguous. The multi-jurisdictional nature of bitcoin ownership does not map cleanly onto state-based POA law.

State law also affects what happens if the agent acts on an ambiguous POA and is later challenged. Some states have protections for agents acting in good faith. Others impose stricter liability. The consequences of acting under ambiguous authority vary by jurisdiction.

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The Interpretation Problem

Interpreting ambiguous POA language requires judgment calls. Courts applying general principles would look at the document's purpose, the principal's intent, and the circumstances. But these factors may not produce clear answers when the document was drafted without bitcoin in mind.

The principal's intent matters, but intent about assets the principal did not own when drafting the document is speculative. If they acquired bitcoin after signing the POA, did they intend the general grant to cover it? The document cannot answer a question the principal never considered.

The agent's practical needs also matter. If bitcoin represents a significant portion of the principal's wealth and the principal is incapacitated, managing their affairs requires addressing the bitcoin. Interpretations that exclude bitcoin from an otherwise broad POA may frustrate the document's purpose. But stretching language to cover unforeseen assets also carries risks.

These interpretation problems rarely get resolved in advance. They surface when someone acts and someone else objects. By then, the principal cannot clarify, the agent has already acted, and the dispute requires resolution after the fact. The ambiguity that seemed tolerable becomes a concrete conflict.

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Assessment

POA bitcoin custody ambiguous language creates uncertainty about whether an agent has authority over self-custody bitcoin. Documents drafted before bitcoin existed or without bitcoin in mind use categories that may or may not include it. Even documents addressing digital assets may leave questions about self-custody specifically.

Self-custody creates special ambiguity because it involves no institution to accept or reject the POA. The agent interprets the document themselves without external validation. Acting under ambiguous authority risks liability, while not acting leaves bitcoin unmanaged during the principal's incapacity.

State law variations affect interpretation without necessarily resolving ambiguity. The interpretation problem rarely gets resolved in advance—it surfaces when actions are challenged after the fact. The gap between document language and custody reality leaves agents in uncertain positions when they need clarity most.

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System Context

Examining Bitcoin Custody Under Stress

Does Power of Attorney Cover Bitcoin

Bitcoin Power of Attorney Requirements

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