Custodial Banking

Definition ∞ Custodial banking refers to financial services where an institution holds and manages assets on behalf of its clients. This service includes safeguarding digital assets, managing private keys, and executing transactions as directed by the client. The institution assumes responsibility for the security and integrity of the assets under its care. Clients retain ownership but delegate the operational control to the custodian.
Context ∞ Within the digital asset space, custodial banking is a significant topic for institutional investors and large enterprises seeking secure solutions for holding cryptocurrencies. A key debate centers on balancing the security benefits of professional custody with the decentralized ethos of blockchain technology. Future developments may involve enhanced insurance provisions and improved integration with traditional financial systems, impacting the institutional adoption of digital assets.