Definition ∞ On-platform custody describes the service where a digital asset exchange or financial platform holds and secures a user’s cryptocurrencies on their behalf. In this arrangement, the platform maintains control over the private keys associated with the user’s digital assets, providing convenience but also introducing counterparty risk. Users typically access their funds through their platform account, relying on the provider’s security measures to protect against theft or loss. This contrasts with self-custody, where users retain direct control of their private keys.
Context ∞ The discussion around on-platform custody is central to security and trust within the digital asset ecosystem, especially following high-profile exchange failures. A key debate involves the balance between user convenience and the risks associated with delegating asset control to a third party. Critical future developments include enhanced regulatory oversight for custodial services and the widespread adoption of proof-of-reserves mechanisms to increase transparency.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
