Custody in crypto refers to how digital assets and private keys are stored and protected. Whoever controls the private key effectively controls the assets.
How It Works
Self-custody means the user controls their own keys through a wallet. Third-party custody means an exchange, custodian, or financial institution holds the keys on the user’s behalf.
Institutional custody often includes cold storage, multi-signature approvals, insurance arrangements, access controls, and audit processes.
Why It Matters In Crypto
Custody matters because crypto transactions are usually irreversible. Poor custody can lead to theft, loss, or operational mistakes.
It is also central to institutional adoption. Funds, ETFs, and corporations need secure custody arrangements before they can hold large amounts of digital assets.
