Custodial and non-custodial wallet

In a custodial wallet, a service provider controls the keys on the user's behalf, typically giving the user a contractual claim to the assets. The provider can usually identify the user and may freeze access or disclose information. In a non-custodial (self-custody) wallet, the user controls the keys without relying on a custodian to authorize transactions. However, issuers can freeze certain tokens, such as USDT or USDC, at the contract level. Hybrid arrangements, such as multisig and MPC wallets, distribute control between users and providers.