Custody (Crypto)

Custody in crypto means a third party safely holds and manages your digital assets (like Bitcoin or Ethereum) on your behalf, similar to how a bank holds your cash. You encounter this when using exchanges, investment platforms, or specialized custody services—especially important if you're investing large amounts and want professional security. It matters because crypto wallets can be hacked or lost, so many investors prefer letting trusted institutions handle the technical security. For example, if you buy Bitcoin through a major exchange, that exchange typically acts as your custodian, storing your coins in secure vaults rather than you managing a private key yourself. The tradeoff: convenience and safety versus less direct control over your assets.