Custodial refers to the situation in which the private keys to a Bitcoin wallet are stored on a server or with a company, not with the “owner” of the Bitcoin wallet. This shifts the onus of protecting the wallet away from the “owner” and to the server or company that is storing the wallet. The purpose of custodial solutions are to make it easier for a user to own and operate a wallet without needing advanced technical experience or deep understanding of Bitcoin.
- What are cryptocurrency custody solutions? – Investopedia