A custodial wallet is one where the end-user of the wallet trusts an external party to hold their funds. The company operating the wallet controls the private keys with access to all user funds. The custodian of the wallet can be seen as the bank for all the users who trust that entity to hold their wallet balances.
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A company that uses Rehive's crypto services essentially acts as a custodian for all their users' funds. This allows for a simple and user-friendly end-user experience but comes with added responsibility for the company operating the wallet to keep the users' funds safe. As a result of this responsibility, it is important for the company's management team to understand how to handle and store cryptocurrency private keys securely.