A custodial wallet (i.e. managed by others) is a type of crypto wallet in which the user entrusts the custody of their funds to a third party. The term ‘custodial’ refers to the management and storage of the private keys needed to access a wallet.
Since most custodial wallets are offered by online platforms or exchanges, this type of wallet is also referred to as ‘hosted‘.
By storing their funds within a custodial wallet, users do not have to worry about storing their private keys: the platform itself will store the access codes.