GlossaryBeginner
Custodial Wallet
A wallet where a third party holds and controls the private keys on your behalf.
A custodial wallet is one where a third party, such as an exchange, holds and manages the private keys instead of the user directly. The user typically accesses their funds through an account login rather than controlling the keys themselves.
This trades direct control for convenience: the provider handles key security and recovery, but the user is relying on that provider's own security practices and solvency. See Kaavon's "Non-Custodial Wallet" glossary definition for the opposite approach, where the user holds the keys directly instead.
Examples
- Funds held in an account on a centralized exchange are typically held in a custodial wallet.
- Recovering access to a custodial wallet usually involves the provider's account recovery process, not a personal seed phrase.