Clear DefinitionsCustodial Service
1 min read
Pronunciation
[kuh-stoh-dee-uhl sur-vis]
Analogy
A custodial service is like a full‑service bank—it holds your assets, executes transactions, and provides financial products, but you rely on its integrity.
Definition
A third‑party platform offering custodial wallets along with additional services like trading, staking, and compliance management.
Key Points Intro
Custodial services bundle features including:
Key Points
Asset custody: Secure key storage with insurance coverage.
Trading interface: Integrated exchange and OTC desks.
Yield products: Managed staking, lending, and interest accounts.
Regulatory adherence: KYC, AML, and reporting handled by service.
Example
Gemini offers custodial services where users can trade, earn interest on crypto deposits, and use insured custody solutions.
Technical Deep Dive
Custodial platforms implement tiered cold/hot key management, transaction approval workflows, and Ledger vaults with multi‑party approval. They integrate AML screening, transaction monitoring, and audit logging.
Security Warning
Service providers can suffer insider threats and regulatory seizures; review terms of service and jurisdiction.
Caveat
Custodial convenience comes with loss of direct control and potential privacy trade‑offs.
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