Building a Bitcoin treasury: a step-by-step guide for UK companies

Holding Bitcoin as part of your company investment strategy can be an innovative way to diversify reserves and potentially boost long-term returns. Retained company profits can be invested in Bitcoin, instead of the shareholders extracting those profits from the company as taxable dividends and making personal Bitcoin investments from the ‘after tax’ amount. However, building a Bitcoin treasury isn’t as simple as buying some Bitcoin and forgetting about it. It requires careful planning, compliance with regulations, proper accounting and tax declaration, and a strategy to handle volatility.

Keeping your Bitcoin activity limited to investment makes accounting much simpler for both you and your advisors, like your accountant and bookkeepers. By keeping Bitcoin separate from your core business operations, your day-to-day accounting remains straightforward. Plus, if you only interact with FCA-regulated exchanges, your banking relationships are less likely to be impacted.

This step-by-step guide walks UK business owners through the key considerations – from initial planning and purchase to accounting treatment, tax implications, regulatory compliance, and managing Bitcoin’s notorious price swings. The goal is to provide an engaging, informative roadmap so you can confidently decide whether and how to integrate Bitcoin into your company’s financial strategy.

Step 1: Educate yourself and set clear objectives

Before diving in, make sure you understand what Bitcoin is and why you’re considering it for your company. Bitcoin is a digital asset that operates on a decentralised network (blockchain) and has a limited supply. Its appeal to companies often lies in its potential as a hedge against inflation, a store of value, or a growth investment. However, it’s also extremely volatile and currently unregulated as an asset class in the UK. Take your time to research how Bitcoin works, its risks, and its potential benefits. Ensure you can articulate your objectives for holding Bitcoin in your treasury – e.g. preserving value against currency debasement, diversifying corporate cash, or simply taking a strategic position in a transformative technology. Clear objectives will guide your decisions and help get buy-in from stakeholders.

Be aware that holding Bitcoin as a business asset may come with additional overheads. Compliance, accounting, tax and regulatory reporting will require extra time and cost to ensure it is correctly reflected in your financial statements.

Assess your company’s risk tolerance and financial position carefully. Bitcoin’s price can be highly volatile, with swings of 20–30% in just days, making it unsuitable as a treasury asset unless your business can withstand significant fluctuations. Determine how much of your reserves you can allocate without compromising operating liquidity. Many companies start with a modest allocation (e.g., 1–5% of reserves) to test the waters, ensuring that even a substantial price drop does not threaten core business stability.

Ensure that your management team and board fully understand Bitcoin’s nature, risks, and strategic role in your treasury. Drafting a formal investment policy can strengthen governance by clearly outlining the purpose of holding Bitcoin, target allocation, risk management measures, and rules for buying or selling.

Remember, this is accounting for your company, where financial records must align with statutory reporting requirements - annual accounts filed with Companies House, VAT returns, and other compliance obligations. Bitcoin is not a mainstream investment, so your company may face additional scrutiny from regulators, auditors, or even banks. UK banks have shown a tendency to ‘debank’ companies involved in crypto, making it essential to have your ducks in a row. Maintaining thorough documentation not only demonstrates sound financial oversight but also provides a clear rationale for external professional advisors, board members, and auditors. This will be invaluable in the event of an accounting audit, regulatory enquiry, or internal review, reinforcing the company’s commitment to transparency and prudent financial management.

Step 2: Develop a Bitcoin treasury strategy

With objectives and risk appetite clear, the next step is to create a practical strategy for acquiring and holding Bitcoin. Decide how much to invest and on what schedule. Will you deploy a lump sum from excess cash, or accumulate gradually over time? A phased approach (e.g. buying a fixed amount each month) can reduce the risk of unlucky timing by averaging your purchase cost. This technique is known as Dollar-Cost Averaging (DCA) or avoiding US terminology, a Scheduled Bitcoin Purchasing Programme (SBPP) – regularly buying fixed amounts of Bitcoin regardless of the current price – which helps smooth out your entry price and mitigate volatility.

Establish internal guidelines for your Bitcoin treasury. Questions to address include:

• Who will have access to the Bitcoin?
• How will private keys or exchange accounts be secured?
• Under what circumstances (if any) would we sell?

It’s prudent to decide on a long-term holding mindset from the start – treat your Bitcoin treasury as a multi-year investment, not a short-term trade (note that short term trading could pull you into being treated as a trader - with different tax consequences to an investor). History has shown that Bitcoin often goes through boom-and-bust cycles and can take years to recover from deep drawdowns. If you or your shareholders don’t have a stomach for that, reconsider the size of your allocation or whether to proceed at all.

Get the right expertise and approvals. Financial decisions might be made by the company owner alone or with a small team. If you have a board of directors or investors, present your Bitcoin treasury plan to them and get formal approval.

It’s also wise to consult your accountant and financial advisor at this stage. They can provide input on the accounting treatment and tax implications and ensure your plan aligns with financial regulations. Not all financial professionals will be well informed on Bitcoin and cryptoassets, so you may need to educate them on the technology and investment, in turn they will need to research how to account for the assets, reflective of your business. It is recommended you use an accountant specialising in cryptoasset tax and accounting, so they understand the nuances of your requirements and have the experience and expertise to advise you on tax optimisation. By having expert advice upfront, you avoid surprises later on (for example, learning at year-end that you accounted for the Bitcoin incorrectly).

Additionally, talking to your bank relationship manager about your plan can be helpful. Banks have a cautious stance towards Bitcoin and other digital assets and have varying policies on dealing with crypto-related transactions. Ensuring you only interact with FCA approved platforms and giving the bank a heads-up might prevent issues when you start moving funds to an exchange.

Step 3: Choose how your company will gain exposure to Bitcoin

Companies can gain exposure to Bitcoin directly or indirectly, with each approach carrying different levels of control, risk, and operational complexity. The two main options are: purchasing Bitcoin directly via a cryptocurrency exchange or gaining exposure through stocks and shares linked to Bitcoin’s price.

This is not investment advice and we are not recommending or endorsing any products or assets mentioned in this article. We are merely giving examples of the type of investments that could be made and it is your responsibility to carry out your own due diligence on any investments that are being contemplated.

For indirect exposure, companies can invest in exchange-traded products such as the IBIT iShares Bitcoin Trust ETF (issued by BlackRock), FBIT Fidelity Wise Origin Bitcoin Fund, or GBTC Grayscale Bitcoin Trust ETF. These instruments track Bitcoin’s price while removing the need for direct custody.

Alternatively, companies can invest in stocks with significant Bitcoin holdings, though these do not necessarily offer a 1:1 correlation with Bitcoin’s price. For example, Strategy (formally MicroStrategy - MSTR) has leveraged debt to increase its Bitcoin exposure, making its stock a high-beta Bitcoin proxy. Similarly, Coinbase (COIN) provides indirect exposure by operating one of the world’s largest cryptocurrency exchanges, meaning its financial performance is closely tied to the crypto market’s overall health.

Each method has its own implications for accounting, taxation, and regulatory compliance, so businesses should carefully consider their risk tolerance and reporting obligations before selecting an approach.

When you’re ready to acquire Bitcoin, one of the most important decisions is where to buy and sell it. For UK companies, the strongest recommendation is to use an exchange or brokerage that is FCA-registered for crypto asset activities. The UK Financial Conduct Authority (FCA) requires crypto businesses (exchanges, custodians, etc.) to register and comply with anti-money laundering (AML) regulations. Choosing an FCA-registered exchange significantly reduces compliance risks for your company. It means the platform has met basic regulatory checks and is committed to UK AML/KYC standards, so you are less likely to unwittingly transact with sanctioned parties or facilitate illicit activity.

Equally important, using a well-regulated platform can protect your banking relationships. UK banks have become cautious (some outright hostile) about payments to crypto exchanges, especially unregulated ones. Several major banks have moved to block customer transfers to unregistered or offshore crypto exchanges due to fraud and scam concerns. By sticking to known FCA-registered exchanges (for example, Coinpass, Coinbase UK, Kraken, Bitstamp, CoinJar, Gemini – all of which have obtained FCA registration), you minimise the chance of your business bank account transfers being flagged or frozen. These reputable exchanges typically have UK Faster Payments integration, making deposits and withdrawals smoother. Their regulated status also means they are more likely to have proper safeguards, insurance, and audit trails – all factors that will make your auditors and finance team more comfortable with the arrangement.

Key considerations when choosing an exchange:

• FCA registration: Verify the exchange is listed on the FCA’s register of cryptoasset firms.
• Security record: Research the exchange’s security history.
• Liquidity and trading Limits: Ensure sufficient GBP/BTC liquidity for large purchases.
• Fees: Compare trading and withdrawal fees.
• Custody options: Some exchanges offer business custodial services.
• Banking: Some cryptocurrency exchanges offer to set up a bank account in your company name. If your company bank is currently imposing a ban on interacting with crypto exchanges, having a bank account with an exchange in your name bypasses these restrictions and can be a good way of segregating your crypto activity away from your core business. CoinCorner and Strike, both have these facilities available.

Key considerations when choosing an Bitcoin exposure through shares:

• Broker listings: Most Bitcoin ETFs or ETPs are based in the US. Due to the FCA imposing restrictions to Bitcoin products for retail investors, you may find it difficult to find a broker who will allow you to buy the ETFs/ETPs.
• Security record: Bitcoin ETFs are relatively new so do your research on how assets are stored, how they are settled and the risks associated with being backed physically (spot) or synthetically via derivatives such as futures or swaps.
• Liquidity and trading limits: You may have to use US dollars to obtain sufficient ETF liquidity.
• Fees: Most ETFs will come with an annual management fee for custody, so beware of ongoing costs.
• Custody options: Some exchanges offer business custodial services.

By picking a reputable, UK-compliant platform, you set yourself up for fewer headaches. You’ll still need to complete the exchange/broker’s KYC process (providing your company’s details, directors’ IDs, etc.) to open an account, which is normal. Plan for a bit of time to get the account verified and bank transfers linked. Once that’s done, you’re ready to execute your purchase.

Step 4: Execute the purchase and secure your Bitcoin

With an exchange account verified and a strategy in place, it’s time to buy your Bitcoin (or shares). Execute your purchases according to your plan from Step 2. For example, if you decided on a lump sum purchase, you might transfer the funds to the exchange/broker and place a single order (or break it into a few tranches to try to average the price). If you choose a Scheduled Bitcoin Purchasing Programme (SBPP), you’ll make periodic buys – you can do this manually or use any automatic recurring buy features the exchange may offer.

Be mindful of execution details:

• For larger buys, using a limit order (setting a maximum price you’re willing to pay) can prevent you from accidentally buying at a spiked price.
• If the market is very volatile on the day, you might spread the buys over a few hours or days to mitigate price swings.
• Avoid market orders for large purchases, as these execute immediately at the best available price but may lead to slippage if there’s low liquidity.
• If possible, work with an OTC desk (off-exchange trading) for large purchases, as they can source liquidity from multiple sources to minimise price impact. Exchanges like Kraken offer OTC features where you can buy at scale, with a fixed price quote.

Since this is a treasury allocation, your focus is long-term value, not short-term trading gains.

Secure storage:

Once Bitcoin is purchased, immediately think about secure storage. Leaving Bitcoin on an exchange long-term is discouraged due to security risks (exchanges can be hacked, go insolvent, or freeze funds due to regulatory issues - think FTX or Celsius)! If you opted for the ETFs, custody is managed for you. However, that comes with counterparty risks. In the future it is expected that most ETF issuers will be allowed to offer ‘in-kind redemption’, where you could then withdraw your Bitcoin to self custody.

You have two primary custody choices:

1. Self-custody (in-house control)

Self-custody means your company holds its own private keys using hardware wallets or other secure storage methods.

• Hardware wallets: Devices such as BitKey or Trezor store private keys offline, reducing exposure to hacks.
• Multi-signature wallets: Requires multiple approvals for transactions (e.g., a 2-of-3 scheme where two out of three authorised people must sign off to transfer funds).
• Cold storage: Keeping private keys offline (e.g., in a bank vault or secure physical location).

Pro's

✅ Full control over your Bitcoin holdings.

✅ Eliminates reliance on third-party custody providers.

✅ No risk of exchange insolvency or custodial failure.

Cons:

❌ Higher responsibility for securing and backing up private keys.

❌ Loss of keys or failure in access control can lead to irreversible asset loss.

Find out more about different types of storage in our article, How to set up a crypto wallet.

2. Third-party custodianship (institutional storage solutions)

If managing security in-house is too complex, businesses can use professional Bitcoin custodians who specialise in securing corporate funds.

• Some major custodians include Coinbase Custody, BitGo, Gemini Custody, and Fidelity Digital Assets.
• Custodians often insure assets, adding an extra layer of protection.

Pros:

✅ Simplifies security and private key management.

✅ Often provides insurance coverage on stored Bitcoin.

✅ May offer additional compliance and reporting features.

Cons:

❌ Requires trusting a third party.

❌ Custody fees may apply.

Regardless of the method, document the procedures in your company’s treasury policy. Your accountant or auditor might also ask how the Bitcoin is secured, as this speaks to internal controls and risk management.

Step 5: Accounting and financial reporting for Bitcoin holdings

Accounting for Bitcoin and Bitcoin ETFs before disposal

Whether your company holds Bitcoin directly or has gained exposure through ETFs or stocks with Bitcoin exposure, they need to be reflected correctly on the company's balance sheet.

How these assets appear on the balance sheet

• Direct Bitcoin holdings: Bitcoin is classified as an intangible asset under International and UK accounting standard IAS 38 (IFRS) and FRS 102 (UK GAAP).
• Bitcoin ETFs and shares in crypto-exposed companies: These are considered financial instruments under international and UK accounting standards IFRS 9 and UK GAAP and appear as investments on the balance sheet.
• No matter how exposure is obtained, unrealised gains are generally not taxable under UK corporation tax rules.

Reports and year-end adjustments

As a minimum, your company will be required to generate financial statements that reflect Bitcoin or stocks on your balance sheet. It’s critical that you use software capable of producing a balance sheet report that breaks down the amounts, acquisition costs, and market values of each asset so that your accountant can make the necessary year-end adjustments.

Your accountant will need to consider:

• Bitcoin direct holdings: If using the cost model, Bitcoin remains recorded at purchase price minus impairment losses. An impairment test should be performed annually to check if the carrying amount needs reducing where the value is less than cost.
• If using the revaluation model, Bitcoin is measured at fair value. Any movement in the fair value of Bitcoin is recognised in the profit and loss account and subsequently transferred to a fair value reserve in the balance sheet.
• For Bitcoin ETFs and shares: Financial instruments are typically recorded at fair value through profit or loss (FVTPL), meaning that any change in value appears in the company’s income statement at year-end.

Your accountant will decide whether:

• Bitcoin holdings require impairment testing and potential write-downs.
• ETF and stock positions need to be marked to market with corresponding fair value adjustments in the income statement.
• Financial disclosures should include details on how fair value is determined and reported.

Accounting for Bitcoin and ETFs when making a disposal

When Bitcoin, or crypto-related stocks are sold, UK companies must calculate gains or losses using the chargeable gains rules for companies. Disposals of ETFs may be treated as chargeable gains or income, but suffer the same rate of corporation tax either way.

Chargeable gains calculation and the 10-day rule

1. Applying share matching rules:

• Companies must follow HMRC’s share identification rules when disposing of Bitcoin or shares in other companies. Also where the disposal of ETF’s are treated as chargeable gains and not income, the same rules will apply..
• If the company disposes of an asset such as Bitcoin and acquired that same type of asset on the same day or in the prior 9 days, the disposal is matched with the most recent purchase (this prevents short-term trading from artificially creating losses).
• If the disposal does not fall within this window, the Section 104 pooling method applies, where the cost is averaged across all units held.

2. Determining the tax classification of the gain:

• Direct Bitcoin holdings and crypto-related stocks: Gains are treated as chargeable gains and taxed under corporation tax rules.
• Bitcoin ETFs (with UK reporting status): Gains are also treated as chargeable gains, and capital losses may be used to offset them.
• Bitcoin ETFs (with UK non-reporting funds): Gains may be taxed as offshore income, meaning they are subject to corporation tax as income and cannot be offset using capital losses.

3. Corporation tax implications:

• All chargeable gains are taxed at the applicable corporation tax rate (currently 19% – 25%). If the company has 51% or more investment activity, there is a flat rate of 25% (for close companies with 5 or less participators - broadly shareholders).
• Generally no immediate tax is applied to unrealised gains.
• There may be deemed income to declare every 6 months from ETFs, even where it is not distributed from the fund.

Financial reporting and compliance

Companies must ensure they are tracking their Bitcoin investments throughout the accounting year and producing the following financial statements:

• Balance sheet report – This details the company’s holdings at year-end, including acquisition costs and market values of each asset.
• Chargeable gains report – This details the overall gain in sterling for each Bitcoin or stock disposal (sale).

With these two financial statements, accountants can make the necessary year-end adjustments to reflect Bitcoin or stock holdings appropriately in company accounts, ensuring:

• Accounting policies for Bitcoin holdings (direct vs stocks) are correctly applied.
• Fair value determination is clearly defined if revaluation applies.
• Gains from disposals are classified correctly as either chargeable gains or income.
• Impairment testing methodology is considered for direct Bitcoin holdings.

By structuring financial records correctly and following UK tax regulations, companies can ensure compliance with both IFRS and UK GAAP standards while minimising tax risks and ensuring proper financial reporting.

Step 6: Managing Bitcoin’s volatility in the treasury

Bitcoin is wild, it is not unusual to see 20-30% swings in a day. Holding Bitcoin or Bitcoin exposed stocks may be a challenge when market conditions are not favourable. Here are some practical tips when it comes to the ongoing management of your holdings.

Risk management approaches:

• Diversification: Keep Bitcoin allocation within a manageable percentage of total reserves (e.g., 1–5%).
• Scheduled Bitcoin Purchasing Programme (SBPP) or Dollar-cost averaging (DCA): Spread purchases over time to mitigate price volatility.
• Rebalancing: Periodically adjust Bitcoin allocation in line with risk appetite (e.g., if Bitcoin doubles in value, consider selling a portion to rebalance).
• Reserve buffer: Keep sufficient cash reserves so the company never needs to sell Bitcoin during a downturn.
• Emotional resilience: Expect significant price swings and plan for multi-year holding periods.

Conclusion

Building a Bitcoin treasury as a company involves strategic planning, compliance, security, and risk management. By following this guide, UK businesses can confidently add Bitcoin to their balance sheets while mitigating regulatory and financial risks.

By implementing these best practices, companies can future-proof their treasury management and take advantage of Bitcoin’s potential.