What Should Crypto Reconciliation Check?

What should crypto reconciliation check? There are four main items: the balance of every address and asset, every transaction record, whether customer assets match the on-chain assets the business actually holds, and fee costs. Balances and transactions prove where the money is and how it got there, customer assets prove there is enough of it, and fees close the small gap that is easiest to overlook.

How Should Balances Be Reconciled?

Balance reconciliation should take a snapshot at the same block height or point in time; otherwise on-chain data and system data reflect different moments, and mismatches are to be expected. The snapshot should go down to three dimensions: chain, token contract and address. Looking only at totals can hide one address having too much while another has too little. The same token on different chains is a different asset, so USDT on different chains, for example, must be counted separately. For UTXO-based chains, you also need to confirm that all unspent outputs are counted correctly.

How Should Transaction Records Be Reconciled?

Every deposit, withdrawal, payment and internal transfer must map one-to-one to an on-chain transaction hash and an order in the business system. A transaction that exists on-chain but not in the system may be a missed deposit, or an unauthorized outflow; one that exists in the system but not on-chain may be stuck or failed. Internal transfers and fund sweeping should be checked on both the sending and receiving side, to confirm money is only moving between the business’s own addresses.

Why Do Customer Assets Need to Be Reconciled?

For exchanges, payment companies and custodians, balances in user accounts are liabilities the business owes its customers and must be fully backed by on-chain assets. Reconciliation should sum all customer balances by asset and compare them with the business’s actual holdings across deposit addresses, hot wallets and cold wallets, and actual holdings must not fall short of customer assets. If the business’s own funds and customer funds sit in the same set of wallets, the two must be clearly distinguishable; otherwise it is hard to prove customer money has not been misused.

Why Should Fees Be Reconciled Separately?

Every on-chain transaction consumes a fee, usually paid in the chain’s native coin rather than the token being transferred. Failed transactions still incur fees, and internal transfers such as sweeping and rebalancing have costs too. Without separate records, native coin balances drift out of line bit by bit, and it becomes hard to explain where the difference came from. A better approach is to record the actual fee for every transaction and assign it to the relevant business line or cost account.

Conclusion

Crypto reconciliation needs to check balances, transaction records, customer assets and fees, each down to the level of chain, asset and address, to actually surface problems. The more detailed these checks become, the more it makes sense to automate crypto reconciliation. Safeheron’s Wallet-as-a-Service provides businesses with MPC key management and a policy engine.

Want to map out your on-chain reconciliation process? Contact Safeheron’s Sales Team to Book a 1:1 Demo