A non-custodial model describes a system or service where users maintain direct and exclusive control over their digital assets’ private keys, rather than entrusting them to any third party. This approach ensures that only the user possesses ownership and access to their funds, eliminating the reliance on intermediaries. It minimizes counterparty risk and significantly enhances individual financial autonomy.
Context
The non-custodial model stands as a foundational principle of decentralization in digital assets, emphasizing user sovereignty over their funds. Regulatory discussions frequently differentiate between custodial and non-custodial services, which impacts compliance requirements and the design of consumer protection frameworks. This distinction is critical.
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