Custodial vs Non-Custodial

In a custodial setup, an exchange or service holds your private keys and controls your crypto on your behalf — you access your balance through their platform, similar to how a bank holds your money. In a non-custodial setup, you (or your own wallet software) hold the private keys directly, and no third party can move your funds without your authorization. Custodial platforms are more convenient (password resets, simpler recovery, easier trading) but require trusting that operator's security and honesty — and your funds are only as safe as the platform's proof-of-reserves and controls. Non-custodial wallets remove that counterparty risk but shift full responsibility for key security onto you, with no company to call if a seed phrase is lost.