The Treasury Proof Ledger: A Cryptographic Framework for Accountable Bitcoin Treasuries (2512.03765v1)

Abstract: Public companies and institutional investors that hold Bitcoin face increasing pressure to show solvency, manage risk, and satisfy regulatory expectations without exposing internal wallet structures or trading strategies. This paper introduces the Treasury Proof Ledger (TPL), a Bitcoin-anchored logging framework for multi-domain Bitcoin treasuries that treats on-chain and off-chain exposures as a conserved state machine with an explicit fee sink. A TPL instance records proof-of-reserves snapshots, proof-of-transit receipts for movements between domains, and policy metadata, and it supports restricted views based on stakeholder permissions. We define an idealised TPL model, represent Bitcoin treasuries as multi-domain exposure vectors, and give deployment-level security notions including exposure soundness, policy completeness, non-equivocation, and privacy-compatible policy views. We then outline how practical, restricted forms of these guarantees can be achieved by combining standard proof-of-reserves and proof-of-transit techniques with hash-based commitments anchored on Bitcoin. The results are existence-type statements: they show which guarantees are achievable once economic and governance assumptions are set, without claiming that any current system already provides them. A stylised corporate-treasury example illustrates how TPL could support responsible transparency policies and future cross-institution checks consistent with Bitcoin's fixed monetary supply.

• The paper introduces the Treasury Proof Ledger (TPL), a framework that maps on-chain and off-chain Bitcoin exposures with cryptographic rigor to enforce conservation and non-equivocation.
• It employs a discrete, event-driven state machine with hash-linked commitments and policy-driven disclosures, enabling transparent and secure audit trails.
• The framework establishes cryptographic guarantees such as exposure soundness and simulation-based privacy, setting new standards for institutional crypto-asset accountability.

Cryptographic Accountability for Bitcoin Treasuries: An Expert Analysis of Treasury Proof Ledger (TPL)

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Motivation and Context

Bitcoin treasuries—institutions and public companies holding significant Bitcoin positions—face a technical and governance challenge: reconciling demands for transparency and auditability with operational needs for privacy and strategic confidentiality. Conventional proof-of-reserves (PoR) protocols are insufficient, as they focus on on-chain solvency at a single custodian and time, fail to capture liabilities or encumbrances, and require operational wallet disclosures that undermine trading strategies and internal controls. The Treasury Proof Ledger ("The Treasury Proof Ledger: A Cryptographic Framework for Accountable Bitcoin Treasuries" (2512.03765)) presents a novel, cryptographically rigorous framework to provide accountable, Bitcoin-anchored transparency across heterogeneous exposure domains, mapping on-chain and off-chain positions, and supporting policy-driven disclosures.

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Abstraction and System Model

TPL models a Bitcoin treasury as a multi-domain exposure vector, where each domain represents a logically distinct class of positions: spot holdings, custodians, exchanges, derivatives, collateral, fee sinks, and future cross-planetary domains. Exposure tracking is algebraic—supporting long and short positions—with conservation enforced except for explicit flows to external parties or the fee domain. The formalism adopts a discrete, event-driven state machine, and every event (deposit, transfer, liquidation, etc.) is recorded with structured metadata, hash-chain commitments, and signatures.

Proof-of-Transit (PoT) receipts, adapted from interplanetary Bitcoin transport protocols, record authenticated, hash-linked evidence of value movement across domains, chaining each event with signatures from both treasury and service-provider keys. Periodic PoR snapshots anchor domain exposures to actual on-chain states or credible external attestations. Policy metadata supports differentiated views, enabling distinct transparency regimes for investors, auditors, and regulators.

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Security Notions and Guarantees

TPL advances beyond existing accountable logging and PoR schemes by formalizing deployment-level security properties:

• Exposure Soundness: It is computationally infeasible to inflate reported Bitcoin exposure across domains above reality without breaking underlying cryptographic primitives or violating minimal non-collusion per domain.
• Policy Completeness: For a fixed disclosure policy $\mathcal{P}$, all events meeting policy thresholds must eventually be surfaced in the committed ledger, barring explicit latency bounds.
• Non-Equivocation: Append-only hash-chained commitments ensure that no party can maintain conflicting ledger histories anchored to Bitcoin without detectable inconsistency.
• Forward Integrity and Auditability: Once a prefix is anchored, any attempt to modify or repudiate events is evident given the non-equivocation and hash-collision resistance of the cryptographic structure.
• Privacy-Compatible Policy Views: Authorised observers extracting views via policies learn only what policies permit, and leakage is bounded to explicit profiles—formalized for public-investor settings using a simulation-based privacy theorem under strong ZK assumptions.

The rigorous game-based definitions are mapped to practical assumptions: the soundness and unforgeability of underlying PoR/PoT primitives, collision-resistance of hash functions, proper configuration of reporting schedules, and the append-only nature of Bitcoin as an anchoring substrate.

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Theoretical Contributions

TPL's compositional approach isolates the core treasury state machine and gives existence-style proofs for integrity properties. The main technical novelty lies in lifting PoR/PoT primitives into a composable ledger state, enforcing conservation laws, supporting policy-driven stakeholder views, and making explicit the cryptographic and governance assumptions needed for robust guarantees.

Specifically, TPL realizes:

• Conservation Across Domains (Theorem 1): Internal transfers strictly preserve the sum of exposures except for explicit outflows/inflows to external domains or fee sinks.
• Restricted Deployment-Level Exposure Soundness: For closed domain sets under faithful policies, TPL prevents adversaries from inflating net exposures, barring collusion or primitive compromise.
• Non-Equivocation and View Correctness: Any verifiable view derived by an observer is uniquely determined by the anchored ledger and deterministic policy, except with negligible probability.
• Simulation-Based Privacy (Restricted): For public-investor policies, leakage is provably restricted to aggregate exposures using ZK-proof-based constructions, and the simulation-based argument holds under strong assumptions.

Full completeness and exposure soundness for expressive policy languages and open domains remain future research, with the current analysis making these boundaries explicit.

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Policy Language and Observability

TPL formalizes stakeholder-centric policy views, allowing deterministic, stateless, and faithful policies specifying filtering, relabelling, aggregation, delay, and materiality rules. Examples range from coarse, highly aggregated disclosures for public markets (with reporting lags and thresholds), to granular, near-complete views for regulated auditors. This abstraction enables differentiated transparency regimes without operational wallet doxxing or exposure of sensitive flows.

Policies are formally mapped to view functions $V_\alpha(\mathrm{TPL}_i)$, and their correctness is proven in the ledger model—any accepted view must be computationally indistinguishable from the honest output given the anchored state machine.

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Reporting Layer and Practical Implementation

The ledger-native reporting architecture employs machine-readable evidence, supports programmatic queries and explanations, and integrates with internal and external auditing workflows. The computation and storage complexity is linear in the number of events and policy windows touched, with anchoring costs amortized over batched commitments. Even in medium-to-large treasuries, the operational overhead is minimal relative to the scale of holdings, and policy-based views are efficiently verifiable.

A stylized case paper details a treasury with multiple domains, hundreds of thousands of PoT events, and quarterly reporting, showing that TPL is compatible with real-world audit and governance cycles, and the cryptographic anchoring enables replayable, verifiable audit trails.

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Implications and Systemic Extensions

TPL provides the foundation for future cross-institutional and macroprudential checks, allowing aggregate supply-consistency experiments to ensure system-wide claims do not exceed Bitcoin’s fixed cap. Families of independently anchored TPL instances can be aggregated, subject to domain coverage and non-collusion, supporting systemic risk monitoring across ETFs, corporates, and custodians. The formal exposure bounds and conservation guarantees close critical gaps left by ad hoc PoR schemes and address regulatory pushes for robust, audit-friendly crypto-asset transparency.

TPL’s architecture is forward-compatible with Lightning, rollups, smart contracts, and even multi-planetary treasury models, provided the underlying primitives admit equivalent PoR/PoT interfaces and anchoring semantics.

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Limitations and Open Directions

The framework's guarantees are strictly bounded by the cryptographic and organizational assumptions: domain completeness, minimal non-collusion, and honestly configured reporting perimeters are required. Hidden rehypothecation, mislabelled exposures, and off-balance-sheet commitments not captured in the domain set are outside the cryptographic envelope and require governance and regulatory oversight.

On privacy, only restricted simulation-based guarantees are proven for specific leakage profiles; general privacy for arbitrarily expressive policy languages and dynamic stakeholders is an open challenge. Full empirical implementation, benchmarking under realistic operational conditions, and exploration of strategic reporting behaviour, collusion, and partial deployment remain future work.

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Conclusion

The Treasury Proof Ledger formalizes a cryptographically accountable state machine for Bitcoin treasuries, surpassing traditional PoR models via append-only, composable evidence logging, policy-based stakeholder views, and explicit deployment-level security notions. It provides machine-verifiable guarantees of exposure soundness, conservation, and non-equivocation under well-defined assumptions, and offers a substrate for next-generation supply-consistency monitoring in Bitcoin’s fixed-cap economy. While implementation and comprehensive privacy analysis for rich policies remain open, TPL’s architecture and security reductions set a new standard for institutional crypto-asset transparency, assurance, and auditability.