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Payments & Banking Technical Explainer

What is a non-custodial wallet?

A non-custodial wallet uses keys controlled by the user or another non-provider party. It can authorise network transactions without a custodian releasing funds, but it is not automatically anonymous or singly controlled.

Key copies can create several controllers

Software, browser extensions and hardware devices may use locally held keys. A seed can recreate the wallet on several endpoints, and backups can be shared, stolen, imported or remotely accessed. Public blockchain activity remains traceable even without a verified wallet account.

Attribute key use through surrounding evidence

Preserve the endpoint, application, addresses, transactions, connected sites and key or seed context without unnecessary opening, updating or network connection. Specialist support may be needed where live assets or sensitive material are exposed.

Combine on-chain tracing with endpoints, communications, exchange interactions and context. Report software, key material, addresses, device and proven controller as separate layers.

The point to remember

A non-custodial wallet removes provider custody, not the need to prove who held and used its keys at the relevant time.

Reference: PAY-159Payments & Banking