Custody (Crypto)

Custody in crypto means a third party holds and secures your digital assets on your behalf, similar to how a bank holds your cash. When you buy crypto through an exchange or brokerage, they often act as your custodian, storing your private keys (the passwords that unlock your coins) in secure vaults. This matters because managing your own security is risky—lose your keys, lose your money forever. You'll encounter custody when opening a crypto account anywhere. The tradeoff: convenience and safety versus giving up direct control. For example, if you buy Bitcoin through a major exchange, that exchange is your custodian until you withdraw it to your own wallet.