Finality and settlement

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Finality is the point after which a transaction cannot be reversed by the protocol's own rules. Bitcoin offers probabilistic finality. Each new block makes reversal of an earlier block exponentially harder, which is why exchanges wait for six confirmations, roughly one hour, before crediting a deposit. Ethereum since its 2022 transition to proof of stake offers economic finality after two epochs, about thirteen minutes, after which reversal would require destroying at least one third of all staked ETH. Permissioned ledgers can offer deterministic finality within seconds because a known set of nodes signs each block.

The legal question is when settlement has occurred. Under the Swiss Financial Market Infrastructure Act (FinMIA; FinfraG), a DLT trading facility must define the point of settlement finality in its rules, and the Federal Council's DLT Ordinance requires the facility to ensure that transfers are irrevocable once that point is reached.¹ The point is not academic. If a Swiss custodian credits a client with Bitcoin after one confirmation and the block is later orphaned, the client has a credit on the custodian's books and no coin on the chain. Who bears the loss depends on the custody agreement, which should say so.

Client question

"Our Singapore exchange credits customer deposits instantly on an internal ledger. Does that create a problem?" It creates two. First, until the chain transaction is final the exchange carries a reversal risk that it should price or disclaim in its terms. Second, an instant internal credit followed by instant internal trading means the exchange is extending the customer the use of value it may not yet hold, which comes close to the credit facilities that MAS Guidelines PS-G03 prohibit for retail customers. Set the confirmation threshold in writing, disclose it, and align the internal credit to it.

Notes

Financial Market Infrastructure Act, SR 958.1, Art. 73a ff. (DLT trading facilities); Ordinance on Financial Market Infrastructures, SR 958.11, Art. 58e ff. as amended by the DLT Ordinance of 18 June 2021, AS 2021 400. See Part E, Chapter V. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.

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Dr Alexander Ressos, TEP

Of Counsel, KGP Legal LLC

I am Of Counsel with KGP Legal LLC in Singapore, where I work with a global client base of successful entrepreneurs and their families, independent asset managers, commodity trading houses and other commercial clients. I am a German and Swiss attorney-at-law, also admitted as a solicitor in England & Wales and in Hong Kong. I divide my time between Zug in Switzerland, Singapore and Hong Kong. Since 2017 I have advised international clients on more than 700 crypto and digital asset projects. I also have extensive experience in cross-border litigation and arbitration in Singapore, Hong Kong and other markets in South-East Asia and Greater China.

I operate across the key financial centres in South-East Asia, the Middle East and Switzerland, with a particular focus on asset protection, international tax and estate planning, as well as trusts, company administration and other fiduciary services. My philosophy is to serve as a trusted advisor working closely with my clients and to help them achieve their commercial objectives.

All Singapore law advice is provided through KGP Legal LLC, an established and duly licensed firm of Singapore advocates and solicitors.

KGP Legal LLC is a medium-sized law firm in Singapore that is capable of providing the full range of legal services and corporate administration work. Please contact me if you need any further information.

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SingaporeIQ is edited by Dr Alexander Ressos, an international business lawyer with more than 15 years of local experience in Singapore as a permanent resident, a Singapore registered foreign lawyer and managing partner of a Singapore foreign law practice. In addition to significant experience in cross-border investments and transactions, UHNWI private client work and sanctions/export controls, Dr Ressos has extensive experience in cross-border business and in crypto and digital-asset projects in Singapore, drawn from more than 700 projects since 2017.

If you are planning a company incorporation, an investment, a holding structure or a market entry through Singapore, you can reach Dr Ressos directly at [email protected]. Singapore law advice is provided by KGP Legal LLC, a licensed firm of Singapore advocates and solicitors. Dr Ressos and his team facilitate the full range of Singapore legal, compliance and company administration services, including company incorporation, corporate transactions, commercial contracts, crypto and digital assets, financial regulatory work and dispute resolution, including litigation in the Singapore courts. For Hong Kong, our parallel site HongkongIQ.com offers the same practical guidance. For crypto and digital assets, dltreg.com covers legal, tax and fiduciary services. For legal, tax and fiduciary services in Switzerland, see helveticaregister.com.