Custodial wallet
A custodial wallet is one where a company holds the private keys and controls the crypto for you, as an exchange or a casino account does.
Also called hosted wallet, exchange wallet, custodial account
Whoever holds the private keys controls the coins. With a custodial wallet, that is a company. You log in with a password, and the company records how much of its pooled funds is yours. Exchange accounts work this way, and so does a casino balance. Once you deposit, the coins sit in the casino's wallets and your balance is a number in its database.
Example. You deposit 500 USDT to a casino. A week later the casino pauses withdrawals for maintenance, or freezes your account for a KYC review. The 500 still shows on screen, but you cannot move it until the casino lets you.
What people get wrong. People think crypto in a casino account is protected the way money in a bank is. It usually is not. There is normally no deposit insurance, and if the casino closes, is hacked or refuses to pay, getting money back is hard. A balance on screen is a promise from the casino, not coins you hold.
The practical rule is to keep at a casino only what you plan to play with, and withdraw the rest to a wallet you control.
Related terms
- Self-custody
Self-custody means you hold the private keys to your crypto yourself, usually backed up as a seed phrase, so that only you can move it.
- Hot wallet
A hot wallet is a crypto wallet whose keys are kept on a device or server connected to the internet, which makes it quick to use but easier to attack.
- KYC (know your customer)
KYC (know your customer) is the identity check where a casino asks for documents such as a passport and proof of address, often before it pays a withdrawal.
- Stablecoin
A stablecoin is a crypto token designed to hold a steady value, most often one US dollar, such as USDT or USDC.