Deciding What to Do With the Balance Nobody Decided to Hold

Client payments accumulated into a stablecoin balance over two months. Nobody had decided to hold it. It was simply what happened when nobody decided not to. I wish I had looked at a stablecoin payment gateway with fiat settlement before rather than after.

The conversation that started it

Our accountant asked what our policy was on holding crypto.

We did not have one. We had a balance, which is not the same thing.

What the policy says now

Purpose. We accept crypto as a payment method, not as a treasury position.

Conversion. Convert to euros on receipt, unless we have crypto-denominated costs, which we do not.

Maximum balance. What is in transit, plus a small buffer. A stated figure.

Who is accountable. Named person, and they report the balance monthly.

Where it sits. The operating balance with our provider. Nothing beyond that.

Who can change this. The two directors, in writing.

That last line is what makes it a policy rather than a suggestion.

The three reasons for converting

A stablecoin is a claim on a private issuer rather than money in a bank. Better than it was, since issuers are now regulated with reserve and redemption requirements, and still not equivalent. A fintech hits this at a different scale, and a regulated European crypto platform is what it uses.

Issuers can freeze specific addresses at the request of authorities. Remote for us, not zero, and it applies wherever the balance sits.

And the accounting. A held balance requires valuation at each reporting date and a disposal recorded on each conversion. Converting on receipt means our books show revenue in euros and a fee, and nothing else.

The third reason is the one that actually decided it.

What the policy is for

Not for the situation we are in. For the situation where a balance grows and nobody notices, which is exactly what had happened.

And for the person making a decision at the time, who now does not have to justify it from first principles.

The auditor’s view

She asked for it before the year end, which is apparently now standard for companies holding any crypto.

Two pages covering purpose, permitted assets, maximum exposure, custody, approvals, conversion policy, valuation method and who can change it.

She said the length did not matter. What mattered was that someone had decided, and that it was written down before rather than after. If you want to see all of this in a real product rather than in my account of it, an exchange that publishes its full terms publishes the terms.