What is Custodial wallet?
A wallet where a company holds the keys and you hold an account with the company.
Exchanges and apps usually work this way: you log in, they hold the underlying assets and the keys. It is convenient and it removes the risk of losing a seed phrase.
It replaces that risk with counterparty risk. If the platform freezes withdrawals or fails, your balance is a claim in a queue, not an asset you control.
Related terms
- Non-custodial walletWallets
A wallet where you hold the keys and nobody can freeze or recover your funds.
- Exchange flowOn-chain
Net movement of a coin onto or off exchanges, read as a selling or holding signal.
- WalletWallets
Software or hardware that holds keys and signs transactions; it does not hold coins.