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Execution

The implementation of a Bitcoin strategy, as per MicroStrategy’s roadmap[1], can be divided into the following phases:

  • Assessment: Conduct a thorough assessment of the company’s current financial and operational posture, as well as its risk tolerance, to determine the feasibility and potential impact of adopting a Bitcoin strategy. This assessment should consider factors such as the company’s investment goals, risk tolerance, and regulatory requirements, as well as its existing technology infrastructure and internal capabilities. This step is crucial in ensuring that the company has a clear understanding of the opportunities and challenges associated with a Bitcoin strategy and can make informed decisions about its implementation.

  • Education: Ensure that all relevant stakeholders, including management, employees, and investors, have a strong understanding of Bitcoin, cryptocurrency, and blockchain technology. This may involve providing training and resources, as well as engaging with industry experts, to help educate and inform the company about the potential benefits and risks associated with this new technology.

  • Due Diligence: Conduct a thorough evaluation of the various Bitcoin exchanges, custodians, and other service providers, as well as a review of relevant laws, regulations, and best practices. This step is critical in ensuring that the company selects a vendor that is secure, reliable, and compliant with relevant laws and regulations, as well as best practices for the management of digital assets.

  • Implementation: Work with the selected vendor(s) and partners to establish a secure and compliant infrastructure for holding and managing Bitcoin. This may involve opening a new corporate wallet, executing transactions, and establishing reporting and reconciliation processes. The implementation phase is critical in ensuring that the company has the necessary technology and operational infrastructure in place to support its Bitcoin strategy.

  • Monitoring: Continuously monitor and evaluate the performance of the Bitcoin strategy and make any necessary adjustments to ensure alignment with the company’s goals and risk tolerance. This may involve monitoring the performance of the Bitcoin portfolio, conducting regular risk assessments, and adjusting the investment strategy as needed.

  • Communication: Develop and implement a comprehensive communication plan to keep all relevant stakeholders informed and engaged, including regular reporting on the performance and progress of the Bitcoin strategy. This may involve providing regular updates to management and employees, as well as providing transparent and accessible reporting to investors and other stakeholders.

  • Risk Management: Establish a robust risk management framework, including monitoring, reporting, and contingency plans, to ensure the safety and security of the company’s Bitcoin holdings. This step is critical in mitigating the potential risks associated with a Bitcoin strategy, including market volatility, technological risks, and regulatory risks.

The above steps provide a roadmap for the implementation of a Bitcoin strategy, inline with the Bitcoin Playbook, and will help ensure a successful and compliant adoption of this innovative technology. However, it is important to note that the pace and scope of the implementation will vary depending on the company’s specific circumstances, risk tolerance, and regulatory environment. It is essential that the company regularly reviews and updates its strategy to ensure that it remains aligned with its goals and objectives, and that it is able to adapt to changing market conditions and regulatory requirements.

Step-by-step

From the 2021 MicroStrategy: World Now sessions, the implementation is composed of the following steps:

Planning Phase

Strategy & Team

  • Clearly discuss and define the initial purpose of the BTC investment

  • Determine internal team: champion, finance working team, legal working team, and IT

  • Hold initial discussions with internal team and clarify purpose, objectives, and timeline

  • Determine target timeline and develop project roadmap

  • Identify external legal advisors with BTC experience: corporate governance, regulatory, contracts

  • Identify external financial advisors with BTC experience: accounting, tax, controls, treasury, and auditor

Corporate Governance

  • Research: general BTC research from banks and artic les, including publicly traded companies with BTC investments

  • Board: summarize past investment-related Board authorizations and prepare list of key initial considerations to facilitate Board and management discussions

  • Conflicts: analyse potentla conflict of interest issues with directors' and officers' personal investments in BTC

Finance and IT

  • Analyse accounting, tax, and internal controls implications/considerations

  • Determine source of fund and associated funding needs

  • Determine IT and security risks, including IT network & infrastructure and communications

  • Determine insurance coverage needs

  • Determine investor relations strategy and associated timelines for announcements and disclosures

  • Determine how to invest in BTC: directly through broker and custodian or through a fund

Vendors and Partners

  • Prepare summary of potential brokers, custodians, funds, and banks to work with

  • Prepare chart of key contractual considerations for brokerage, custodial, and/or fund agreements

Completion

  • Update project roadmap with timeline, actons, and owners

  • Conduct Board meeting to discuss proposed BTC investments, address questions and concerns, and obtain support to move forward

Execution Phase

Part 1

  • Prepare Treasure Policy

  • Prepare Trading Policy

  • Negotiate brokerage and custodial agreements

  • Set up brokerage, custodial, and/or funding accounts

  • Train team, setup test transactions, etc. for each partner account

  • Prepare accounting memo

Part 2

  • Implement appropriate IT defenses and changes

  • Obtain insurance: custodian, cyber security, D&O, and other

  • Prepare SEC disclosures, BTC-related disclosures for filings such as 8-Ks, 10-Qs, 10-Ks, etc.

  • Prepare communications strategy: commuinications to employees, investor relations, and public relations

  • Prepare Board and associated committee meeting documents and resolutions

  • Conduct Board, Investments Committee, and Audit Committee meetings to approve Treasury Reserve Policy, BTC Trading Poliucy, and permitted brokers and custodians, clear any conflicts of interest, and approve initial BTC purchase

Post-execution Phase

  • Determine amount, timing, frequency, source of funds, and method for subsequent BTC purchases

  • Determine the need and method of external communications regarding subsequent BTc purchases

  • Conduct subsequent BTC purchases, as appropriate

1. Microstrategy, Bitcoin (BTC) initiative - project roadmap, February 2021