Possession of private keys to user’s funds by authorized third parties.
Custody is a term used in cryptocurrency to describe the possession of private keys (they help to open and confirm a transaction) to a user’s fund(s) by authorized third parties. This is usually the best option for recent users who are not accustomed to how key management works.
Although, when traders rely on custody, it does not in any way ensure the security of their currency. Nonetheless, traders are strongly advised to keep their digital currencies in cold storage if they want to prevent theft, especially if they have no immediate plans to use them.