Custodial Wallets are personal or business wallets controlled by a company or cryptocurrency exchange (like Coinbase or Binance), which stores your private keys for you.

Non-custodial wallets, on the other hand, put the responsibility of storing your wallet keys in your hands.

Custodial wallets are considered less safe than noncustodial wallets because if hackers were able to access an exchange’s network, they could potentially access your private keys and ultimately have complete control of your account balance, allowing them to steal your digital assets.

Bear in mind that while most large centralized cryptocurrency exchanges have enterprise-level security systems in place to keep hackers away, there are many examples of crypto exchanges getting hacked and user’s losing their account balances.

Custodial wallets tend to be preferred by many because they’re more convenient to use and don’t require as much responsibility to store and use them.

Most web-based crypto wallets are custodial wallets.