Digital Assets in the Corporate Treasury: A Governance Imperative for Boards

The Rapid Advance of Digital Assets Into Institutional Usage

The rapid adoption of Bitcoin and other cryptocurrencies as a corporate treasury asset is forcing boards to confront questions that go far beyond financial engineering. PYMNTS recently reported that 154 public companies had, as of early August 2025, raised or committed nearly $100 billion this year to purchase crypto, an extraordinary increase compared to the $33.6 billion raised by just 10 companies in prior years. This trend also goes beyond Bitcoin. The CEO of The Ether Machine recently announced his plans to acquire more than $1.5 billion of ETH and Galaxy, Multicoin Capital, and Jump Crypto have announced a collaboration to accumulate $1 billion of Solana. And Evernorth Holdings announced that it will go public via a SPAC merger to raise $1 billion, which will be used to build the world's largest institutional XRP (decentralized public blockchain) treasury. Other companies such as Trident ($500MM) also are building XRP treasuries. Some public companies are building stockpiles of Binance's layer-1 native token, $BNB, and Hyperliquid Strategies (an arm of the Layer-1 blockchain built for DeFi) has filed an S-1 registration statement with the SEC to raise up to $1 billion, including for acquiring its native token, HYPE. The scramble reflects growing interest in digital asset treasuries ("DATs") across industries from hotels to electric vehicle makers, but it also highlights the risks of concentration, leverage, and volatility.

The DAT trend brings with it a fundamental governance question: how should fiduciary duties be exercised when corporate assets are allocated to investments in one of the most volatile instruments in modern markets? Boards, treasurers, and risk committees cannot afford to treat these decisions as novel experiments. They implicate the core obligations of duty of care and duty of loyalty, disclosure, and long-term shareholder value. Importantly, the duty of care requires that Board members educate themselves regarding the matter with respect to which they are providing oversight. In-house counsel for publicly held financial institutions must become alert to this need for robust board education, which differs sharply from typical bank practices.

There are also new items of significance which in-house counsel should assess. The Department of Commerce recently announced that it was putting GDP data on chain. Bringing this data on chain may lead to innovative use cases for blockchain markets, such as automated trading strategies, increased composability of tokenized assets, issuance of new types of digital assets, and DeFi protocol risk management based on macro-economic factors. The data will be updated monthly or quarterly and is rolling out on a number of Blockchain ecosystems (Arbitrum, Avalanche, Botanix, Ethereum, Mantle, Optimism, Sonic and ZKsync). Support for other blockchains can be incorporated over time based on user demand.

The question is how can corporate financial leaders employ this information for better, faster, and cheaper money movement? The answer may be in the layered structure of Blockchain networks, known in technical terms as Layers 0 through 3. These represent different parts of the blockchain stack from underlying communication protocols to the interfaces that involve customers and enterprise resource planning (ERP) systems.

For example, one issuer recently introduced a Layer 1 blockchain designed for institutional grade stablecoin payments, foreign exchange, and capital markets; while another announced it was employing stablecoin rails to expand its global money movement capabilities.

Thus, there is a growing importance of understanding the taxonomy around these corporate focused blockchains and their technical layers at the managerial and boardroom levels. Just as traditional finance evolved distinct but interlocking systems for messaging (Swift), settlement (ACH, Fedwire), and compliance (AML/KYC), blockchain layers map to similarly specialized functions, but with different speed, cost, and composability profiles.

Finally, there is the trading and yield-generating opportunity provided by a DAT. Some believe that this may be the start of a complete reimagination of the utility and growth potential of corporate treasury assets in the 21st century. A DAT represents a strategic shift from passively preserving assets to actively growing them, using the unique mechanics of decentralized finance (DeFi) to counter the erosion of traditional money. A DAT does not have to sit idle. It can be actively managed to generate extra yield through the use of mechanisms within DeFi such as staking (earning rewards by helping to secure proof-of-stake networks), lending (earning interest through overcollateralized lending), and the provision of assets (i.e., tokens) to liquidity pools to earn a share of transactions fees. Of course, along with such opportunities come risks—such as market volatility, "impermanent loss," regulatory uncertainty and operational risks (e.g., smart contract bugs, sophisticated hacks and protocol exploits).

Hence, establishing the requisite level of knowledge for directors to fulfill their duty to make fully informed decisions about the use of blockchain and digital assets and associated regulatory, accounting, and tax issues will be a critical imperative for board education going forward.

Fiduciary Duties and Corporate Purpose

Directors are bound by the duty of care to act on an informed basis. The general rule under Delaware law is that directors owe duties of loyalty and care to the corporation and its stockholders. Guth v. Loft, 5 A.2d 805, 812 (De. 1939). This includes a duty of oversight and monitoring. In re Caremark International Derivative Litigation, 689 A.2d 659 (Del. Ch. 1996); and Stone v. Ritter, 911 A. 2d 363 (Del. 2006) a duty of oversight claim must allege facts sufficient to support an inference that (1) the defendant "utterly failed" to implement a system of reporting and controls, or (2) that the defendant "consciously failed" to monitor or oversee such system controls thus remaining unaware of risks or problems requiring attention. Recent decisions denying motions to dismiss suggest that duty has been extended to corporate officers as well. Marchand v. Barnhill and McDonald's Corporate Shareholder Derivative Litigation. 2023 WL 387292, C.A. No. 2021-0324-JTL (Del. Ch. Jan. 26, 2023). Similar claims have also survived in cases regarding the Boeing 737 Max air crash (In re The Boeing Company Derivative Litigation, No. 2019-0907-MTZ, Del. Ch. 2021) as well as claims against the boards of Wells Fargo (SEB Investment Management AB v. Wells Fargo & Co, No. 22-cv-03811-TLT, USDC N.D. CA, Sept. 20, 2024) and Abbott Labs (In re Abbott Laboratories Infant Formula Shareholder Derivative Litigation, No. 1:22-CV-05513, USDC N.D. IL, August 7, 2024). These decisions have developed two "prongs" of the duty of oversight. The first relates to companies' "mission critical" operations, for which boards should have specialized reporting mechanisms. The second relates to presence or absence of "red flags" which should alert the board to potential key developments they should be monitoring. It has become nearly axiomatic that boards cannot make such decisions without revieing underlying documentation and the adequacy of the methods by which recommendations to the board are formed. Smith v. Van Gorkom, 488 A. 2d 858, 875 (Del. 1985).

Accordingly, when a treasurer or CFO proposes allocating treasury resources to Bitcoin (or other forms of crypto), the board must receive more than an aspirational presentation. Directors need to be presented with a comprehensive analysis of Bitcoin's volatility, liquidity profile, accounting treatment, and tax and regulatory exposure relevant to their company's business objectives. Directors must also evaluate the operational rationale. Is Bitcoin being deployed as an efficiency tool to facilitate a short-term repurchase agreement, or is it being accumulated as a long-term speculative reserve? Now, with government economic data going on chain, similar questions must be asked about engaging with blockchain protocols with. The answer matters because it will define the risk profile and the disclosure obligations that follow.

The duty of loyalty reinforces this educational expectation. Boards must be able to demonstrate that treasury allocations to digital assets are undertaken solely in the interest of the corporation and its shareholders, not to serve the personal beliefs or speculative interests of management. Documented independence of judgment, the disclosure of any conflicts, and robust deliberation are critical to satisfying this duty. Evidencing sufficient education to understand the pros and cons of crypto decision-making will be required. Moreover, assuming crypto continues to advance at its current pace, deferring on deciding these critical issues may no longer be an option, Boards will have to be educated as to why they would decide not to engage with crypto. The operational complexity of crypto, as well as its price volatility and potential vulnerability to security threats make the boards' task even more challenging.

Balancing Value Creation With Volatility

The central governance challenge is how to reconcile the shareholder expectation of value creation with the inherent volatility of digital assets. For most public companies, investments in crypto may depend on the company's risk profile. A measured approach requires boards to adopt frameworks that balance innovation and efficiency gains with diversification and liquidity management.

Directors must also require management to develop clear exit strategies. Large digital asset positions cannot be unwound casually. Significant sales could themselves move the market, creating significant losses. Boards should therefore understand whether phased sell downs, hedging programs, or stop loss mechanisms are available. The absence of an exit framework increases the risk that an allocation could be viewed as reckless rather than strategic given that if (or when) prices plunge, companies may not be able to repay their bondholders, costing investors' money.

Disclosure is another element essential to balancing shareholder interests. Because digital asset holdings are material to financial performance, companies must provide accurate and timely disclosures in SEC filings and investor communications. Regulators and shareholders alike expect not only an explanation of the holdings, but also a description of the governance process for investing in and holding digital assets.

Governance Structures and Risk Oversight

Boards should treat Bitcoin and other digital assets like any other material treasury decision, but with governance calibrated to the unique volatility of the asset noting differences attributable to different risks associated with stablecoins or tokenized securities. That means adopting formal structures to manage allocation, oversight, and reporting as well as a robust risk assessment program. A board-approved digital asset policy should define maximum allocation thresholds, approval requirements, and conditions under which digital assets may be purchased or sold, and whether to choose self-custody or third-party custody. Risk committees should stress test the impact of severe price declines on liquidity, leverage, and equity, and evaluate whether holdings could jeopardize compliance with debt covenants or capital requirements. And the board will want to understand (and strengthen if necessary) the standards in place to escalate issues, first up to senior management and then to the board.

Ongoing oversight is equally important. Management should be required to provide regular reports to the board on the market value of Bitcoin and other digital asset holdings, unrealized gains or losses, stress test results, custody solutions, insurance coverage, contingency planning, and relevant regulatory developments. Digital assets are not static. Neither should the board's oversight.

Boards should also consider appointing independent experts. Retaining outside advisors such as specialists in crypto markets, risk management, and disclosure provides both substantive analysis and an additional layer of credibility to the governance process. Informed and well documented minutes reflecting independent experts' input will be crucial if these decisions are later reviewed by regulators or challenged by shareholders.

How Boards Get Comfortable

Boards must be able to justify how they became comfortable with the risks of Bitcoin and other digital asset accumulation. For companies like Strategy (formerly MicroStrategy), the decision may reflect a core business strategy that shareholders understand and accept. But for companies where cryptocurrencies are not central to the corporate mission, boards will need to demonstrate rigorous deliberation and be prepared to address questions about the rationale, risks, and even the environmental impact of investing in and holding digital assets.

That rigor should include careful documentation of deliberations, including consideration of alternatives and stress test scenarios. It should also reflect director competence; boards must show that they understand the asset class and its implications. Relying on independent advisors can help, but directors themselves must be sufficiently informed to discharge their duties. The governance process, not the asset, will be what ultimately shields boards from any shareholder claims of breach of duty.

Toward Governance Standards

One of the challenges in this space is the absence of standardized governance frameworks. Each company is left to develop its own approach, which risks inconsistency and confusion. Organizations such as the North American Securities Administrators Association (NASAA), which already issues model rules in other contexts, could play a role in establishing expectations for governance and disclosure of corporate digital asset holdings. Until such frameworks exist, boards and their counsel must rely on first principles: the fiduciary duties of loyalty, skill, diligence, and care (including oversight and monitoring), thorough disclosure, regulatory compliance, and robust risk management.

Conclusion

Digital assets on the balance sheet represent more than financial innovation. They are a governance test that demands attention to fiduciary duty, shareholder value, disclosure, and risk oversight. Directors must ensure that decisions are made on a fully informed basis, that they serve the corporation's interests, and that they are supported by clear policies and risk frameworks.

The question for boards is not so much whether digital assets can be held, but how they can be governed when used for investment, operational, and transactional purposes. Counsel should help guide directors toward decision making that is responsible, transparent, and consistent with fiduciary standards. In doing so, boards can adapt to the realities of investing in or holding digital assets while preserving the discipline that underpins effective corporate governance.