Non-custodial execution describes the processing of transactions or agreements where users retain complete control and ownership of their digital assets throughout the entire operation. This contrasts with custodial services where a third party holds assets on behalf of the user. In non-custodial execution, cryptographic keys remain solely with the asset owner, minimizing counterparty risk and enhancing security against centralized failures. Decentralized exchanges and self-custody wallets are primary examples of this approach.
Context
The principle of non-custodial execution is a foundational tenet of decentralized finance and a frequent subject in crypto news, particularly concerning user autonomy and security. Debates often weigh the benefits of self-custody against the convenience offered by centralized platforms. Regulatory bodies are increasingly examining the implications of non-custodial models for consumer protection and anti-money laundering compliance.
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