Custodial risk

Custodial risk — the risk that whoever holds your asset fails, freezes, or steals it. Crypto’s version is the sharpest: coins on an exchange are an IOU from that exchange (FTX made the lesson expensive), and “not your keys, not your coins” is the folk statement of it. Self-custody trades exchange risk for key-management risk you must actually be competent at. The concept generalizes: any asset you can’t withdraw on demand — platform balances, app wallets, offshore accounts — carries a custodial line in its honest risk list.

First used in: 2.5 · The speculative sleeve