Updated
GL-C-05
01 / In 30 seconds
The short answer
- What it is
- A wallet in which the private keys are managed by the service, not by you
- The opposite
- A non-custodial wallet: the owner holds the keys, with full control and full responsibility
- The advantage of custodial
- Convenience, recovery of access, support
- Drawback
- You depend on the reliability and solvency of the service
- For compliance
- A regulated service provides a documented transaction history — this matters
02 / In plain words
What Custodial wallet means
A custodial wallet is a store of crypto assets in which the private keys are managed by the service provider. You log in with a username and password, while actual control over the keys lies with the platform. The opposite model is a non-custodial wallet, in which the owner keeps the keys and no one else has access.
Each model has its own risk logic. The custodial option is convenient: access can be recovered, there is support, and you do not have to solve the problem of storing keys securely yourself. But you depend on the reliability, integrity and solvency of the service. The non-custodial option gives full control but also full responsibility: losing the keys means losing the assets irretrievably.
A separate aspect matters for our purposes. A regulated custodial service with full client identification leaves a documentary trail: transaction history, confirmations, statements. When evidencing the source of funds this is fundamental: the bank or programme reviewer wants to see documents, not screenshots. Assets that have passed only through anonymous wallets are considerably harder to explain.
A case from practice
When preparing a client’s dossier, some transactions had gone through a regulated platform and some through anonymous wallets. The first part was evidenced by exports and statements; the second had to be explained indirectly and took considerably longer.
When it matters
- Storing crypto assets
- Proof of source of funds
- Converting into ordinary money
- Succession planning
- Opening a bank account
- Preparing a file on your capital
03 / What it covers
What is compared
Custodial
- The service holds the keys
- Recovery of access
- Support and convenience
Non-custodial
- The owner holds the keys
- Full control
- Full responsibility
Risks
- Reliability of the service
- Loss of keys
- Regulatory restrictions
Compliance
- Documented history
- Client identification
- Statements for the bank
04 / How it works
How to choose and use one
Define the storage task
Check the service’s status
Set up security
Keep the transaction history
A ready dossier if needed
05 / Key facts
What you need to know
01
In the custodial model the service manages the keys
02
In the non-custodial model the loss of keys is irreversible
03
A regulated service provides a documented history
04
Banks look closely at the source of crypto assets
05
Heirs’ access needs to be thought through separately
Common mistakes
- Keeping large sums with an unregulated service
- Not keeping the transaction history and confirmations
- Not thinking through heirs’ access
- Ignoring two-factor authentication
- Expecting to explain the source of assets verbally
06 / Expert advice
How to prepare in advance
If crypto assets are part of your capital, work through regulated platforms with full identification: they leave the documentary trail the bank will require. Keep the transaction history from the very start. And think through heirs’ access separately — in this sphere, losing access means losing the asset.
What we do for you. We advise clients with crypto assets to keep their capital with regulated providers and to keep the transaction history. This is not about distrust of the technology — it is about the fact that evidencing the source of funds requires documents.
Robert HaasHead of Company Formation
07 / Questions
Frequently asked questions
In a custodial wallet the service manages the private keys; in a non-custodial one, you do. Hence the different risk models.
There is no single answer. In one case you depend on the reliability of the service, in the other on your own discipline in storing the keys.
It carries out identification and leaves a documentary trail: the transaction history and statements that the bank and the programme check will require.
In the non-custodial model, access to the assets cannot be recovered. In the custodial model there is usually a recovery procedure through the service.
In advance: arrange access and record instructions for the heirs. Without this, the assets may be lost irretrievably.
With a confirmed history from the source of income to conversion — as a rule, yes. Without documents — almost certainly not.
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