Definition ∞ Non-custodial intermediaries are entities or protocols that facilitate digital asset transactions or services without ever taking direct control or possession of users’ funds. They provide the tools and infrastructure for users to retain full ownership of their private keys and assets throughout the process. Decentralized exchanges and certain DeFi lending platforms exemplify this model. This approach prioritizes user sovereignty and reduces counterparty risk.
Context ∞ The regulatory classification of non-custodial intermediaries is a significant and ongoing discussion in the digital asset space, particularly concerning their obligations under anti-money laundering (AML) and know-your-customer (KYC) laws. Debates often focus on how to apply traditional financial regulations to entities that do not hold customer assets, balancing consumer protection with the principles of decentralization. Future developments will likely involve specific regulatory guidance tailored to these unique service providers.
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