Through several different regulatory and legislative actions, including through Executive Orders and the passage of the GENIUS ACT, the current administration has created a favorable environment for cryptocurrency. In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, examines the recently adopted legislation and regulatory actions concerning cryptocurrency and considers the D&O insurance underwriting implications. I would like to thank Sarah for allowing me to publish her article on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.
*************************
In August, Treasury Secretary Scott Besset confirmed that the United States’ Strategic Bitcoin Reserve (SBR), consists of $15 – $20 billion in coins. Besset further stated that the Treasury Department is “committed to exploring budget-neutral pathways to acquire more Bitcoin to expand the reserve.” His position on continuing to accumulate Bitcoin aligns with President Trump’s March 2025 Executive Order (EO), which directs the U.S. Treasury to establish the SBR. In addition to the Crypto EO and creation of the SBR, the first federal cryptocurrency legislation, the GENIUS Act, was signed into law in July.
Also of note, as of Q2, public companies reportedly purchased around 131,000 Bitcoins. With Bitcoin trading around $115,000–$120,000 and rising, companies holding the asset may currently be boosting the value of their corporate treasuries. Even so, will D&O underwriters of companies acquiring Bitcoin face increased exposure as a result?
While the Treasury increases SBR Bitcoin holdings and the GENIUS Act may create some cryptocurrency guardrails, the SEC requires companies to reporton Bitcoin ownership. In addition, reports of criminal activity related to cryptocurrencies, including Bitcoin, continue to make headlines. This may leave D&O underwriters and insured companies wondering whether Bitcoin is a good corporate investment or a liability.
The following discusses Bitcoin and the GENIUS Act briefly, disclosure requirements for Bitcoin ownership in SEC filings, as well as recent crypto-related criminal activity, and potential D&O risk stemming therefrom.
What is Bitcoin?
Bitcoin (BTC; ₿) is the first decentralized cryptocurrency. It began operating in 2009, and in 2021, El Salvador became the first country to adopt it as legal tender. As D&O Diary Readers may recall, Bitcoin is the native asset of its own blockchain, with each unit of value recorded on its distributed ledger. Its price is determined by supply and demand in open markets, meaning it is not a stablecoin. Bitcoin transactions are secured by cryptographic digital signatures and validated through the network’s proof-of-work consensus, which prevents double-spending, while private keys ensure only owners can authorize transfers.
Notably, Besset has indicated that the Treasury SBR’s current Bitcoin holdings were mostly derived from past seizures of criminal enterprises and that future Bitcoin additions will be confiscated through law enforcement actions. While the Treasury can seize Bitcoin from criminal bad actors, executives and corporate boards may purchase Bitcoin as part of a corporate investment strategy to diversify or hedge against inflation.
It is important to note that, at this time, the GENIUS Act does not protect corporate Bitcoin holders, since its provisions apply only to stablecoins. While the Act creates federal oversight and consumer protections for payment stablecoins, it does not extend similar safeguards to Bitcoin or other non-pegged digital assets.
Even so, the GENIUS Act may encourage broader crypto adoption in payments and settlement, indirectly boosting corporate comfort with digital assets (including Bitcoin).
The GENIUS Act is the first federal cryptocurrency legislation enacted in the U.S. The Act establishes a legal framework for the issuance, sale, and redemption of stablecoins — digital assets pegged to a sovereign currency. The Act further provides regulatory clarity for businesses and financial institutions using stablecoins in payments and financial infrastructure. Under the law, stablecoin holders have the right to redeem tokens at face value. Because Bitcoin is non-pegged and its value is based on supply and demand, this type of redemption by companies holding Bitcoin as an investment may not be available if its value plummets.
SEC Filings
Thus, corporations investing in Bitcoin may be required to file 10K and 10Qs with the SEC that report the risk tied to Bitcoin’s price volatility. It is also important to note that, under U.S. GAAP, Bitcoin is treated as an intangible asset with an indefinite life (not cash, not a financial instrument). As of January 1, 2025, a new FASB standard (ASU 2023-08) requires certain crypto assets, including Bitcoin, to be measured at fair value, with unrealized gains or losses recognized in net income each reporting period. Accordingly, there may be executive and regulatory exposure stemming from corporate reports on Bitcoin ownership and value in public filings.
And, as a result, Bitcoin ownership may come under shareholder scrutiny, especially if its value craters. Bitcoin was valued as low as $76,000 in April of this year; however, its current market value is now up 58%. While that is a strong return, corporate treasuries that include crypto may be less versatile when liquidity is needed if Bitcoin’s value dips again. Therefore, there may be increased shareholder demands on corporate boards when Bitcoin is disclosed as an investment strategy.
Shareholders may also be concerned by rising reports of crypto-related cybercrime and physical attacks on large holders and their families.
Crypto Crime
As of mid-August, U.S. officials have sanctioned more than a half-dozen crypto exchanges around the world for allegedly serving cybercriminals. This includes Russian cryptocurrency exchange, Garantex, which, according to the Treasury Department, custodied and laundered large sums of crypto, including millions of dollars derived from Russia-linked ransomware attacks. U.S. and European law enforcement agencies have repeatedly accused the platform of being used by cybercriminals as well as gangs and designated terrorist groups.
The Garantex platform allegedly allowed people to circumvent sanctions on Russian banks by bringing rubles to the company’s offices in Moscow and St. Petersburg and getting cryptocurrency in return, which could then be exchanged for other fiat currencies. Bitcoin was not necessarily identified as a cryptocurrency exchanged on the Garantex platform, however, the association with government-identified criminal actors may impair Bitcoin’s reputation.
Another concerning trend tied to cryptocurrency is that theft of cryptocurrency increased in 2025, with total crypto losses, including Bitcoin, reaching nearly $2.8 billion in the first half of this year. One disturbing development is the rise of so-called “wrench attacks”. In a wrench attack, criminals use physical violence or coercion against individuals to access their crypto holdings. Two recent incidents, both in France, involved the daughter and grandson of a prominent cryptocurrency CEO who were attacked in broad daylight in Paris and the father of a crypto entrepreneur being abducted and held for ransom.
While companies holding Bitcoin may have Kidnap and Ransom insurance, increasing the risk of kidnapping or violence against an executive with access to corporate Bitcoin private keys may also call into question a board and executive team’s duty of care and oversight.
Conclusion
As Bitcoin’s popularity as a holding, both by the U.S. treasury and by companies, increases, D&O underwriters may want to consider whether existing coverage is sufficient for the follow-on risks. Will the crypto coin’s volatility call into question executive financial management decisions? And, will ties to criminal activity degrade shareholder sentiment when companies disclose Bitcoin acquisitions? Time will tell, but in the meantime, D&O insurers may want to be aware of which companies’ treasuries now include Bitcoin.
The views expressed in this article are exclusively those of the author, and all of the content in this article has been created solely in the author’s individual capacity. This site is not affiliated with the author’s company, colleagues, or clients. The information contained in this article is provided for informational purposes only and should not be construed as legal advice on any subject matter.