An entity that meets a jurisdiction’s legal standard for holding client assets on their behalf, subject to supervision and to rules on segregation.
Why it matters
The status is a legal one, not a technical one: it determines how client assets are treated if the custodian fails, and whether they form part of its estate. Two firms with identical security engineering can sit on opposite sides of that line.
What you can check
Whether a firm holds the status, and under which regulator, is a matter of public register. The terms of service should state whether assets are held on trust and whether they are segregated — the same question that separates custodial from non-custodial arrangements.
Where it showed up
Records in the Incident Tracker that turn on this: Mt. Gox collapse.
Not advice. Definitions are for understanding, not instruction. Nothing here is financial, legal, tax or security advice.