How a double-entry ledger works
Every transaction is booked as at least two entries, and the debits equal the credits. A card payment, for example, moves an amount out of the customer's account and into a settlement account, with the fee on a revenue account.
A balance is never stored as a number that code overwrites. It is derived from the entries, so every figure can be explained, and a mistake is corrected with a new entry that reverses the old one. Any past day can then be replayed from its entries.
Two more mechanisms keep the books right. A hold reduces the available balance before money moves. An idempotency key identifies each operation, so a retried request or a duplicate notification is booked once, not twice.
Reconciliation against the bank and the custodian
The ledger says what the platform owes each customer. A statement from the bank, the card processor, the custodian or the blockchain says what is actually held. Reconciliation compares the two, and any difference is investigated.
In the UK, the FCA's safeguarding rules for payment and e-money firms, in force since 7 May 2026, require an internal reconciliation at least once each reconciliation day, broadly each business day. An external reconciliation compares the firm's records, currency by currency, with the latest statement from the bank or custodian.
In Dubai, VARA requires reserve assets equal to 100% of what is owed to clients, reconciled daily. In the EU, MiCA names no reconciliation frequency.
The EU duties that depend on the ledger
For a crypto-asset service provider, MiCA and its record-keeping standard ask for:
- Clients' ownership rights safeguarded, and no use of clients' crypto-assets for the firm's own account
- Clients' funds placed with a bank or a central bank by the end of the next business day, in a separately identifiable account
- For custody, a register of positions in each client's name, and a statement at least every three months
- Records of all services, orders and transactions kept for five years, or up to seven if the authority asks
- Records that cannot be altered, and that show each correction and what stood before it
- Records that tell one client's assets from another's, and from the firm's own, at any time
Double-entry ledger, blockchain or accounting software?
- Blockchain
- A distributed ledger, shared between the nodes of a network. A platform's double-entry ledger is its own private book of record, and an on-chain balance is one of the statements it is reconciled against.
- Accounting software
- Holds summarised journals for the company's own financial statements. The platform's ledger holds every customer entry as it happens.
- Core banking system
- A ledger together with the banking products built on it, such as interest and statements. A platform runs its own ledger as the core, or mirrors an existing one.
- Balance table
- One stored number per customer, with no entries behind it. A double-entry ledger replaces it with a balance that the entries explain.
Where a double-entry ledger shows up in a platform
Modules that do the work
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Custody & walletsWallets on every major chain, with MPC custody from leading providers or your own keys.
- Accounts & IBANsCustomer accounts with their own IBANs, on the partner bank and the rails you choose.
- PayoutsMoney out to bank accounts, cards and wallets, on the rail that fits each payment.
- BackofficeOne console to run the platform: customers, money, risk, content and staff permissions.
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
Platforms that need it
Guides that go deeper
- MiCA checklist: launching a crypto exchange in the EUWhat the EU's Markets in Crypto-Assets Regulation asks of an exchange: authorisation, capital, governance, client assets, the trading platform rules, and the laws that sit beside it.
- What does it cost to launch a crypto exchange?Licensing, capital, technology, liquidity and people: where the money goes when you launch an exchange, and which of those costs depends on how you build.
- EMI or payment institution licence in the EU, and the agent routeWhat an e-money institution and a payment institution may do in the EU, the capital each needs, safeguarding, passporting, and launching as an agent first.
- EMI or payment institution licence in the UK, or launch under a partnerE-money or payments, authorised or small: what the FCA asks for in capital, safeguarding and people, how long it takes, and when an agent or banking partner is the faster route.
- VARA licence for a crypto exchange in DubaiWhat Dubai's virtual assets regulator asks of a crypto exchange: the two-stage licence, the rulebooks, capital and fees as VARA publishes them, local staff and the Travel Rule.
Where it is written
The laws and standards this page's facts come from.
- Regulation (EU) 2023/1114, MiCA, Articles 68, 70 and 75 (EUR-Lex)
- Commission Delegated Regulation (EU) 2025/1140, records kept by crypto-asset service providers (EUR-Lex)
- FCA, PS25/12, Changes to the safeguarding regime for payments and e-money firms (CASS 15)
- VARA, Company Rulebook, Part VI, Reserve Assets
General information, not legal advice: what applies to you depends on your services and your market.