A crypto custodian is similar to a traditional financial custodian.
In the traditional finance industry, a custodian is a financial institution that stores securities and other assets on behalf of institutional investors to minimize the potential risk of loss or theft. Before the digitization of the financial markets, custodians held piles of physical stock and bond certificates. Today, most securities are kept in electronic form.
A crypto custodian stores digital asset holdings on behalf of professional and institutional investors. They are independent storage and security systems used to hold large quantities of tokens in exchange for a fee.