Custodial Wallet Definition - Glossary

Custodial Wallet is a digital wallet managed by a third party that holds private keys for users.

Custodial Wallet is a type of digital wallet where a third-party service provider holds and manages the private keys on behalf of the user. This means the user trusts the provider with the security and control of their cryptocurrencies. Such wallets are common in exchanges and offer convenience, as users don't need to manage private keys themselves. However, it also means users must rely on the provider's security measures. While they are user-friendly, they may lack the full privacy and control provided by non-custodial wallets.