SecProbe.io

United States securities and exchange commission logo
January 22, 2024
Michael Prevoznik
Chief Financial Officer
BTCS Inc.
9466 Georgia Avenue #124
Silver Spring, MD 20910
Re:BTCS Inc.
Form 10-K for the Fiscal Year Ended December 31, 2022
Form 10-Q for the Quarterly Period Ended September 30, 2023
File No. 001-40792
Dear Michael Prevoznik:
            We have reviewed your October 16, 2023 response to our comment letter and have the
following comments.
            Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this letter, we may have additional comments. Unless
we note otherwise, any references to prior comments are to comments in our September 21,
2023 letter.
Form 10-K for the Fiscal Year Ended Year Ended December 31, 2022
General
1.We note your response to prior comment 1.  We continue to consider your response and
may have further comments.
2.Refer to your response to prior comment 2.  In your response letter, you state that your
business should be viewed as "more akin to that of a service provider that supplies
computer hardware or software," and that you, therefore, do not engage with the crypto
assets in such a way that the identification of crypto assets as securities will impact
your business, financial condition and results of operations.  Further, you state that you
have determined that how you account for the crypto assets you hold will not change as
you believe that, "despite certain crypto assets being identified as securities by the
SEC, they do not meet the definition of a security under U.S. GAAP pursuant to ASC
because the decentralization of the blockchains will result in the participation of the digital

 FirstName LastNameMichael Prevoznik
 Comapany NameBTCS Inc.
 January 22, 2024 Page 2
 FirstName LastNameMichael Prevoznik
BTCS Inc.
January 22, 2024
Page 2
assets no longer being linked to participation in property or an entity."  In future filings,
please add risk factor disclosure addressing the risks and limitations of your
determinations, including that they are risk-based judgments and not a legal standard or
determination binding on any regulatory body or court.  Also address the risks to your
business, financial condition and results of operations if a regulatory body or court finds
that your conclusions are incorrect.
3.We note your response to prior comment 8 and reissue in part. In your response, please (i)
include your calculation under section 3(a)(1)(C) of the Investment Company Act,
identifying each constituent part of the numerator and denominator and (ii) identify the
assets that you treat as “cash items” for purposes of your analysis.
Business
Our Business, page 3
4.Refer to your response to prior comment 11.  In future filings, please include a more
detailed description of the nature of your staking services, including the specifics of how
the staking process operates on StateSeeker's Stake Hub.  In this regard, we note your
disclosure on page 3 that "StakeSeeker’s Stake Hub is central to BTCS’s growth strategy,
allowing users to Delegate their crypto assets to the Company’s validator nodes."
Disclose how the arrangements with users of the platform are structured, and clarify
whether your platform only allows users to stake or delegate their crypto assets to your
validator nodes or if the platform allows users to stake to third-party validators
using Stake Hub.  In this regard, we note your response to comment 17 in which you say
that "crypto asset holders can delegate to validator nodes not operated by the Company
and sign up for StakeSeeker to utilize [y]our software."  Also, in future filings, please
include the Token Rewards Production table you include in response to comment 26.  To
the extent that you do not earn revenues from certain users or for certain services, so state
in future filings.  In this regard, we note your response to comment 9 that "BTCS operates
the StakeSeeker platform, which is currently a free-to-use personal finance software and
informational website."
5.Refer to your response to prior comment 14.  In future filings, please clarify that you self-
custody your crypto assets, disclose what portion of your crypto assets you hold in hot
wallets and cold wallets, whether you hold your private keys in cold storage and whether
you have insurance that covers the loss of your crypto assets.  In this regard, we note the
first and second risk factors on page 28.
6.Refer to your response to prior comment 17.  In future filings, please disclose how you
calculate the estimated staking rewards that you include on your platform.
7.Refer to your response to prior comment 22.  Please revise to disclose the functionality of
Stake Hub on your Stateseeker platform.  In addition please describe your policies and
procedures for ensuring that your business operations are in compliance with the federal
securities laws related to the decision to add functions, services and crypto assets to your

 FirstName LastNameMichael Prevoznik
 Comapany NameBTCS Inc.
 January 22, 2024 Page 3
 FirstName LastNameMichael Prevoznik
BTCS Inc.
January 22, 2024
Page 3
crypto asset platform.
Risks Related to Crypto Assets
A particular crypto asset's status as a security, page 19
8.Refer to your response to prior comment 31.  In future filings, please revise to balance the
proposed disclosure by, for example, disclosing that the legal tests to determine whether a
crypto asset is a security has been established by the U.S. Supreme Court case law and
that the Commission and staff have issued reports, orders, and statements that provide
guidance on when a crypto asset may be a security for purposes of the U.S. federal
securities laws.  In addition, please explain what you mean by the statement that refers to
"murky legal issues."
Note 3. Summary of Significant Accounting Policies
Crypto Assets Translations and Remeasurements, page F-9
9.We note your response to prior comment 37.  Please tell us, and revise future filings as
requested, to address the following:
•Quantify rewards earned for productive assets included in "crypto assets" and "staked
crypto assets;" and
•Your accounting for all three of your crypto line items, including your accounting for
them as productive/non-productive characterizations, staked/non-staked, and their
relevant lock-up periods.
10.We note your response to prior comment 37 and your disclosures on page 14 in your
December 31, 2022 Form 10-K and page 27 in your September 30, 2023 Form 10-Q that
you view your crypto as long-term holding that is not held for regular trading, and that the
Company’s cash position and liquid crypto assets are sufficient to support its daily
operations over the next twelve months.  As most of your crypto assets are recorded as
current assets on your Balance Sheet, please reconcile these disclosures for us and tell us
how your classification of cryptocurrencies as current assets is consistent with the
definition of current assets in ASC 210-10-20.
Form 10-Q for the quarterly period ended September 30, 2023 filed November 9, 2023
Unaudited Condensed Financial Statements
Note 3 - Summary of Significant Accounting Policies
Stablecoins, page 9
11.We note your disclosure on page 9 that you hold stablecoin, but the accounting for it is
unclear.  Please tell us, and revise future filings, to address the following:
•Quantify stablecoins that are USDT (Tether) and USDC (USD Coin);
•Clarify your accounting for USDT and USDC specifically whether you believe each
coin is an indefinite-lived intangible asset under ASC 350 or financial asset under
ASC 825; and

 FirstName LastNameMichael Prevoznik
 Comapany NameBTCS Inc.
 January 22, 2024 Page 4
 FirstName LastName
Michael Prevoznik
BTCS Inc.
January 22, 2024
Page 4
•Tell us whether you have a Circle Mint account and whether you can redeem
USDC for US fiat.
Revenue Recognition, page 9
12.Please tell us, and revise future filings, to quantify revenue from running your own crypto
asset validator nodes as well as revenue by staking crypto assets on nodes run by third-
party operators.  Please quantify in all periods presented.  Please also tell us whether and
to what extent you have generated any revenue from your Staking-as-a-service business.
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
Company Overview, page 22
13.Please revise your quarterly crypto asset tables to disaggregrate revenue by the coin on
which it is earned.
            Please contact Bonnie Baynes at 202-551-4924 or David Irving at 202-551-3321 if you
have questions regarding comments on the financial statements and related matters. Please
contact Sonia Bednarowski at 202-551-3666 or John Dana Brown at 202-551-3859 with any
other questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets