Asset verification for business owners with crypto on the balance sheet
Date: | Week: 29 | Reading time: 7 minutes | Updated: Author: Tyler Dijst
In short
Crypto on the balance sheet almost always raises questions for a bank or investor: where did it come from, and does it truly belong to the company? With a clear account of its origin, those questions can usually be answered well. Whether the lender accepts it is their decision.
Paucitas is an independent expert firm in the Netherlands that establishes the origin and legitimacy of crypto assets, in hundreds of cases a year. In practice the question usually comes from the bank or the tax authority.
Get in touch with Paucitas or ring +31 20 244 5774. In a free intake you will hear what your company needs.
In a nutshell
A figure on the balance sheet tells a lender little. A traceable account of where that figure came from tells them a great deal. Paucitas maps out the origin of the company's crypto and separates it from personal holdings, in a report you hand over yourself.
You run a company and part of its assets are held in crypto. Now you want to apply for finance, or your accountant has questions about the annual accounts. Suddenly you need to explain where that crypto came from, how it was built up and why it belongs to the business. That is tricky when the first purchases were made personally years ago.
We understand. It does not mean anything is wrong, only that a clear explanation is needed. In this article you can read what asset verification means for a company and how Paucitas helps.
Why do lenders ask about crypto on the balance sheet?
Under the Money Laundering Regulations 2017, regulation 28, banks and other firms must understand where their customers' money comes from. With crypto they ask more often, because the origin is not obvious from a bank statement. A one-off valuation is not enough: the lender wants to see how the assets were built up.
All banks follow the same rules, whether it is an app-based bank or a traditional high street bank. What differs is how they ask. One bank requests documents through a portal, another sets up a meeting with a relationship manager.
What is asset verification for a company?
Asset verification establishes where the crypto on the balance sheet came from and which route it took. For a company there are three questions: how much crypto is there, how was it built up, and which part belongs to the company and which to the owner personally. With crypto, that last question is often the hardest. More background in proving the origin of assets.
How do you separate personal and business crypto?
With crypto, personal and business holdings mix more often than with an ordinary bank account. A founder might have bought the first bitcoin personally and later transferred it into the limited company. Or one wallet was used for both business and personal payments.
Paucitas maps out per wallet which transactions are business and which are personal, and when assets moved from one to the other. That makes the balance sheet explainable to your accountant and to the lender.
An example from practice
The owner of a tech company had held crypto on the balance sheet of his limited company since 2018. When he applied for finance, the bank asked where it came from. Part of it had once been bought personally and transferred in later, but that had never been recorded.
Paucitas reconstructed the route: the personal purchases, the moment of transfer into the company and the business transactions after that. The accountant used the outcome in his notes, and the owner handed the report to the bank himself.
Paucitas takes privacy very seriously and never shares clients' personal details. This is a composite example: names, amounts and details have been changed. The situation is one we see in practice.
Is there an application with a deadline? Let us know straight away. You can ring at any time, 24/7, on +31 20 244 5774.
What does Paucitas deliver, and what not?
Paucitas works everything out: the transactions, the route of the money, the parties, the documents and the timeline. We do all tracing ourselves, without tracing tools. We also go through documents, emails and other communication with exchanges, banks and your accountant, so that a complete picture emerges of where the assets came from and where they went. The result is a chain reconstruction in a report that anyone can follow and understand step by step, including a credit analyst with no knowledge of crypto. Where data is missing, the report says so honestly.
Paucitas does not give tax or legal advice. We provide the evidence, and you or your adviser handle the tax return and the accounts. HMRC guidance on crypto is available on GOV.UK.
For the accountant and adviser
The report is set up to fit your file: the origin per wallet, the value at chosen reference dates and the split between personal and business. Also read how an accountant evidences a client’s crypto assets and what Paucitas does for accountants and advisers.
Will the bank or investor accept the report?
That is the lender's decision. Only the party asking the question can decide whether it has been answered. What Paucitas does is make sure the origin is clearly and verifiably on paper. In practice, that often shortens the conversation considerably. If doubt remains, a bank may ask further questions or take extra steps, such as submitting a suspicious activity report to the NCA. A clear explanation helps to keep it from getting that far. More in your bank asks about the origin of crypto.
What is the first step?
A free intake. You do not need a technical file ready: it is enough to know roughly which wallets, exchanges and accounts are involved. For a personal application, such as a mortgage with crypto assets, the approach is similar.
- Costs: every investigation is tailored. You receive a bespoke quote beforehand that we go through together, with no surprises.
- Turnaround: from the same day to around two weeks.
- Availability: you can ring at any time, we answer the form within 1 to 3 hours, and email within 24 hours, usually the same day.
Does your company hold crypto on the balance sheet? Get in touch for a no-obligation introduction, or ring +31 20 244 5774.
Sources: Money Laundering Regulations 2017, regulation 28; GOV.UK, tax on cryptoassets; National Crime Agency, suspicious activity reports.
Do you have questions about this blog?
Feel free to get in touch with Paucitas. Paucitas can be reached by phone 24/7, including evenings and weekends. Through the contact form we usually reply within 1 to 3 hours, and we answer e-mail within 24 hours.
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Frequently asked questions about crypto on the balance sheet
What do lenders ask about crypto on the balance sheet?
Paucitas finds they usually ask for a verifiable origin of the crypto and a clear split between personal and business. A report that shows the route step by step meets that request.
What is the difference between a valuation and asset verification?
Paucitas explains: a valuation says what the crypto is worth at one moment. Asset verification shows where it came from and how it was built up. Lenders usually want the latter.
What if personal and business crypto are mixed?
Paucitas sees that often and maps out per wallet which part is business and which is personal, and when assets were transferred in.
Does Paucitas give tax advice?
Paucitas does not give tax advice, but provides the evidence. You or your adviser handle the tax return and the accounts, and Paucitas is happy to work alongside them.
What does asset verification cost for a company?
Paucitas tailors every investigation. You receive a bespoke quote beforehand that we go through together, with no surprises. The intake is free and without obligation.
From Amsterdam, for the whole of the UK
Everything can be done fully online. Prefer to meet in person? You are very welcome at our office in Amsterdam, by appointment.
Paucitas is an independent expert firm based in the Netherlands that, for clients across the UK, investigates investment fraud and crypto fraud, establishes the origin and legitimacy of crypto assets and prepares expert reports for legal proceedings and compliance.
Your own situation
If you are reading this, you probably have a question about your own situation. That is exactly what Paucitas does.
The first step is contact by phone. You can book that call by phone or through the contact form, so you do not have to wait. In the call we look together at what can factually be established in your case and what Paucitas can examine for you.