Custodial

Custodial is a model in which a firm, such as an exchange, holds the private keys on the client’s behalf, and the client sees only a balance and the right to request a withdrawal.

You log in with a password, and the exchange manages the rest. It’s convenient: there’s a password reset, a helpline and simple withdrawals. The price is dependence on the firm. It has to keep running, it mustn’t lock you out or go bankrupt, and when there’s a problem, your access depends on its terms and identity checks.

The difference shows clearly in who holds the keys. In self-custody the keys are yours, in a custodial model they belong to the firm. That’s why careful people keep on an exchange only what they need for trading.

Custodial storage doesn’t always mean an exchange. Some payment apps and savings services that offer crypto use the same model. The terms and conditions tell you who holds the keys.

Why it matters for your family

After the account holder dies, an exchange usually asks for inheritance documents and runs its own procedure, which can be long and differs between firms. Heirs also need to know the account exists. The guide on an exchange account after the owner’s death explains what happens next. The pillar on exchange vs self-custody gives the wider picture.