A custodial wallet is a cryptocurrency wallet in which a company or other third party holds or manages the private keys that control access to the funds. The user typically accesses the wallet through an account, rather than handling the keys directly. This can make setup and recovery easier, but means the user relies on the provider to safeguard access and process transactions.
In cybersecurity, that reliance adds a point of trust: account takeovers, weak recovery procedures, provider outages, or restrictions on an account can affect access to funds. In products such as crypto debit cards, a custodial wallet may be part of the chain connecting a user’s crypto balance to spending. Users should understand who controls the keys, how accounts are protected and recovered, and what happens if access is suspended. A non-custodial wallet differs because the user retains direct control of the keys-and responsibility for protecting and backing them up.