Custodial means a third party holds the keys and you hold a claim against them; non-custodial means you hold the keys and there is no counterparty.
Why it matters
This single distinction determines what happens when things go wrong. A custodial failure is an insolvency question answered by law; a non-custodial failure is final and has no appeal. See what self-custody actually means.
Not advice. Definitions are for understanding, not instruction. Nothing here is financial, legal, tax or security advice.