A custodian is a financial services provider, typically a large bank or financial institution, that holds or ‘has custody’ of assets. Custodians hold customers’ securities for safekeeping to prevent them from being stolen or lost. The custodian may hold stocks or other assets in electronic or physical form. Owing to the hundreds of millions, billions or even trillions in assets kept, custodians tend to be reputable and large financial services providers.
In the cryptocurrency and blockchain industry, a blockchain-native custodian will hold assets on behalf of depositors. However, unlike financial institutions holding a range of assets secured by the government, national laws revolving around crypto assets have not been made to insure against loss. Therefore, a blockchain-native custodian holding Bitcoin for example, will ensure that their security infrastructure is resilient enough in the face of malicious actor attacks.