What is the difference between custodial and non-custodial wallet?

A custodial wallet service (like Coinbase or Kraken) holds on to the private key, so it is responsible for safeguarding a user’s funds. A non-custodial wallet, on the other hand, gives users full control over their private key, and with it sole responsibility for protecting their holdings. What are crypto keys again?

What are custodial crypto wallets?

The majority of custodial crypto wallets are web-based exchange wallets. As such, crypto exchanges take custody of digital assets to provide a convenient solution for crypto storage. Generally, centralized exchanges such as Coinbase and Binance keep users’ private keys for security and accessibility.

How do I know if my wallet is custodial?

If your wallet doesn't have this option, it's custodial (meaning you're not in full control of your cryptoassets). The Bitcoin.com Wallet, which is fully self-custodial, also offers a cloud backup service (in addition to giving you the option to store the private key for each of your wallets as a mnemonic phrase).

What is a web-based custodial wallet?

User Convenience: Web-based custodial wallets are generally designed with user-friendly interfaces. Having your funds in custodial wallets will allow you to trade on associated exchanges right away. On the other hand, non-custodial wallets require you to manually move funds on and off centralized exchanges.