Custody in cryptocurrency refers to the safekeeping and management of digital assets. When someone holds cryptocurrency in a wallet or on an exchange, they are essentially entrusting their funds to a third party to store and protect. This third party is known as a custodian.

Custodians play a crucial role in the cryptocurrency ecosystem by providing secure storage solutions for large investors, institutions, and individuals who may not have the technical expertise or resources to safeguard their own assets. Custodians typically offer services such as cold storage, multi-signature wallets, and insurance to protect against theft or loss.

By utilizing a custodian, investors can have peace of mind knowing that their funds are being held in a secure manner. This is especially important in an industry that is susceptible to hacks and security breaches. As the cryptocurrency market continues to grow, the need for reliable custody solutions will become increasingly important to safely store and protect digital assets.