Custodial
A wallet or service is custodial if the user is not in control of their own private keys.
A wallet or service is custodial if the user is not in control of their own private keys. For example, most exchanges and brokerages are custodial: they store the bitcoin and control the keys while showing the user their balance based on the company’s internal ledger. Custodial wallets may have extremely high security, but they are also subject to government regulation and cannot be audited.
A custodial service’s solvency or security practices cannot be proven by the average user. Likewise, if a user wants to send or receive bitcoin using a custodial service, they risk being censored or having their funds confiscated. For this reason, bitcoiners encourage one another to withdraw their bitcoin to a self-custodial solution.
Custodial is a key concept in Bitcoin custody and security, relating to how Bitcoin private keys and funds are stored and managed. Onramp offers institutional-grade Bitcoin custody solutions and educates clients on concepts like Custodial to ensure the highest standards of asset protection.
Frequently Asked Questions
What is Custodial?
Custodial refers to a method or concept in Bitcoin key management and custody. Proper understanding of Custodial is essential for securing Bitcoin holdings against unauthorized access.
How does Custodial affect Bitcoin security?
Custodial directly impacts how securely Bitcoin is stored. Onramp employs institutional-grade custody practices, including multi-institution custody through partners like BitGo, CoinCover, and Tetra Trust.
Does Onramp implement best practices related to Custodial?
Onramp's multi-institution custody model ensures that Bitcoin holdings are protected using industry-leading security practices. Onramp manages approximately $250M in assets under management with rigorous custody standards.
