The Essential Wallet Guide, Part 3: Custodial and Non-Custodial Mobile Wallets

The Essential Wallet Guide, Part 3: Custodial and Non-Custodial Mobile Wallets

Not all mobile crypto wallets are the same – some give you full control of your assets, and some don't. See if custodial or non-custodial is right for you.

By Katya Michaels MEW

4 min read

Being able to access your finances on the go has revolutionized how we live, work, and communicate. Some people make their entire living from working online, and their mobile phones are a big part of that system. To move crypto adoption forward, the developer community is tapping into the potential of crypto wallets that are designed specifically for the smartphone. (If you are concerned that mobile apps are not compatible with financial security, take a look at this article – you might be surprised!)

There are so many mobile crypto apps to choose from out there, that it may be difficult to understand how they differ and what specific benefits they offer. Mainly, mobile crypto apps fall into two categories:

1. custodial wallets (centralized, hold your coins for you, don't give you keys)

2. non-custodial wallets (decentralized, you are in full control of your keys and coins)

Which app will be right for you depends on what your goals are and how comfortable you are with self-custody.


The most important distinction to understand with all crypto wallets, including mobile ones, is whether they are custodial or non-custodial, centralized or decentralized.

In a custodial (centralized) wallet, the platform holds all your assets and information for you. With these wallets you are more likely to have the same options that are available in a regular banking app, such as resetting your password, getting special deals on your birthday, signing up for an email list, and sometimes recovering stolen assets. These wallets can also be tied to online exchanges, so it’s important to be aware how and where your information is being shared.

A good example of a custodial wallet is the original Coinbase app. Accounts are synced across their servers, so you can access the same wallet from either web or mobile by simply logging in with your email. This is very convenient, but it’s also a clear sign your personal information is being collected and stored by a third party. In these cases, there’s barely any difference from having a regular banking app. You don't have your wallet keys, and you are not in control of your assets and information.

By the way, exchanges can also be centralized or decentralized. When custodial wallets are tied to an exchange, it’s most likely a centralized exchange that holds your keys and your assets. Decentralized exchanges don’t hold your assets or manage your keys, so using them in combination with non-custodial wallets allows you to retain full control over your crypto.


In a non-custodial (decentralized) wallet app, you are in charge of everything. None of your information is stored, so no one can manage your assets but you. This can sound frightening initially, but it’s also liberating in the long run. You will never have to pay surprise fees, deal with support for your password problems, or worry about your information getting leaked through back-end servers... because it doesn’t exist there. Your entire financial identity is yours alone.

This is what is meant by ‘being your own bank’ and ‘not your keys, not your crypto’. From a certain perspective, decentralization is the reason for blockchain’s existence in the first place, and with non-custodial wallets, you are taking advantage of the benefits of decentralized finance. MEW's mobile app, MEW wallet, is a true non-custodial wallet just like MEW's web interface, leaving you in full control of your keys and assets.

Managing crypto in a decentralized way doesn't have to be difficult. MEW wallet makes buying ETH and managing ERC20 tokens simpler than ever, but you must take good care of your recovery phrase, because no one else can do it for you.

Non-Custodial Wallets, DApps, and Web3

Another advantage of a non-custodial wallet that works well with decentralized solutions is that you can connect to new, exciting DApps on web3 and take advantage of opportunities as soon as they appear. A non-custodial mobile wallet like MEW wallet app lets you browse DApps and stay safe by acting as a second factor for transaction confirmation. How? MEW wallet users can connect to the MEW web interface and other DApps by scanning a QR code with their phone, and every transaction will need to be confirmed on the phone app first.

This is a much safer and more convenient solution than having to access every DApp on Web3 directly with wallet keys, and establishes a connectivity network that exposes users to everything that the Ethereum has to offer. Similar mobile connection protocols WalletLink and WalletConnect are used by other mobile wallet apps for Web3 interaction. These protocols are supported by MEW's web interface, allowing many mobile wallets to get full access to the Ethereum blockchain.

With so many crypto apps, it can be difficult to tell which type of solution you are using. When in doubt, remember this: if you are not asked for your personal info, but you’re receiving a 12 or 24 word phrase that you are asked to keep very safe and never give to anyone – you are using a non-custodial solution. If all you get is a password to the app but no private key or phrase, and need to sign up with your email and address – then it’s a custodial one.

For even more insight into custodial/non-custodial solutions, read more about how a crypto wallet is not like a bank.

Ready to try MEW wallet app? Download here.

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