With a custodial service you sign in with a username and password and the platform moves funds when you ask, much like online banking. It is convenient and recoverable, but it means trusting that company to stay solvent and keep your access open.
The opposite arrangement is non-custodial, or self-custody, where you alone control the keys. The common reminder "not your keys, not your coins" captures the trade-off: a custodial balance is a claim on a company, not direct control of the asset.
Custodial vs Non-Custodial Wallets: Who Holds the Keys?
Key takeaways
- Custodial means a company holds your keys and your crypto on your behalf.
- It is convenient and recoverable, but you are trusting that company entirely.
- If the platform fails or freezes access, your funds can be caught up in it.
Custodial — questions fréquentes
Is keeping crypto on an exchange custodial?
Yes. The exchange holds the keys, so your balance is effectively a claim on the company rather than direct control.
How do I move from custodial to self-custody?
Set up a non-custodial wallet, back up its seed phrase, and withdraw to its address, starting with a small test amount.
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