Crypto Basics
What is custody?
Custody, in crypto, is who controls the private keys that can move funds: the holder in self-custody, or a third party such as an exchange that holds the keys for the customer.
The short answer
Custody is the key question of crypto storage. Whoever holds the private keys controls the funds. The funds themselves sit on the blockchain, not in any wallet. There are two sides. Self-custody keeps the keys with the holder. Custodial arrangements keep them with a service.
The definition, sourced and dated
The regulator definition comes first. Crypto asset custody refers to how and where you store and access your crypto assets. That is the SEC’s investor bulletin, dated 12 December 2025 [1].
Underneath it sits the maker taxonomy, carried here verbatim from the wallets research. Rows T-1 through T-5, never reworded. A crypto wallet is a tool that stores the private keys that control blockchain funds. It signs transactions with them. The funds themselves are recorded on the blockchain, not inside the wallet [2]. Self-custody means the wallet holder holds the private keys, or the seed phrase that generates them. The holder is the sole party able to sign. Exchange custody means a third-party service holds the keys. The customer holds an account claim instead [2].
That last sentence is the whole subject in miniature. An account claim and a private key are different instruments. The first depends on the other party. The second depends on the holder keeping the key safe.
The mechanism, two axes
Custody has two independent axes, and the maker documentation carries both.
The first axis is key control, the self versus third party line above. bitcoin.org states the trade in a single sentence from its security guide. When a third party controls your keys, you rely entirely on their security and honesty [3]. The same source adds that exchanges and online wallets can be hacked, can fail, or can freeze access. Self-custody removes that dependency. It replaces the dependency with a harder one. Lose the key material and its backup, and there is no reset and no recovery [2].
The second axis sits inside self-custody, the storage axis. A hot wallet keeps keys on an internet-connected device. A cold wallet generates and stores keys offline. The keys are never exposed to the internet [2]. The cold versus hot comparison runs this axis across sourced criteria. It picks no winner. Neither does this page.
Neither axis says which arrangement anyone should choose. They name what is being chosen. Key control decides who can move funds. Storage decides what an attacker must reach to steal them.
Two dated examples
The practice layer moves with events, and the events are dated. In 2026, a hardware maker’s advisory documented predictable seeds on affected firmware and warned that an update is not a seed migration. The advisory was verified 4 September 2026. Press corroboration from 17 August 2026 carried a figure of more than 130 million dollars. That is press-attributed context, not a practice row. The wallets research records both under its practice rows.
The regulator layer has its own date. The SEC published its retail custody bulletin on 12 December 2025. It is an overview of custody types for retail holders [1]. A regulator explaining the options, rather than a vendor selling one, is the layer this term definition stands on.
Where custody connects to the rest of the site
Custody is not only a wallet topic. The issuer side of a stablecoin is a custody question too. What backs a token, and at what coverage, is the reserve ratio term’s subject. Depeg moments are when custody choices get stress-tested, because moving funds in minutes requires keys the holder can actually use. The depeg term covers that event class. The practice pages carry the depth this definition defers. The seed phrase safety page covers the backup every form of self-custody depends on. The GENIUS Act page covers the United States federal framework that formalizes issuer-side rules.
What is a crypto wallet?
A tool that stores the private keys that control blockchain funds and signs transactions with them. The funds are recorded on the blockchain, not inside the wallet, per the maker docs. Hot and cold describe the keys, never the coins. That is wallets-pack row T-1, quoted rather than paraphrased.
What is a stablecoin wallet?
The same tool as any crypto wallet. It holds keys and signs. The stablecoin sits on the blockchain as an entry those keys control. Stablecoins add no special wallet technology. What differs is the custody choice on this page. Self-custody through a phrase, or a custodial account at a service.
How do I protect stablecoins long-term without a hardware wallet?
The definition page answers narrowly, and the practice pages carry the detail. Two documented paths exist. Self-custody on any device follows the seed phrase discipline, generate on device, keep copies offline, test recovery. A custodial account trades key risk for third-party risk. In bitcoin.org’s words, you rely entirely on their security and honesty. No option is recommended here.
Where this term sits
The cryptocurrency hub frames the cluster this glossary belongs to. The sibling terms reserve ratio and depeg carry the issuer-side pairings of this concept. Every claim above carries its source and date.
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