A custodian is a company that holds crypto on behalf of others. The custodian manages the private keysPrivate keyA secret number that proves you own the crypto in your wallet. Whoever holds the private key controls the crypto., and customers see their balance in an app or on the web. Most crypto exchangesCrypto exchangeA company or platform where you buy, sell and swap crypto, for example with krónur. are custodians.
What does a custodian do?
It is a lot like keeping money in a bank. The deposit is yours, but the bank stores it and handles the security. In the same way, the crypto is yours, but the custodian looks after the keys.
Custodians often combine hot and cold wallets with techniques such as MPCMPC (multi-party computation)A technique that splits a private key into shares on separate systems, so transactions are signed jointly without the full key existing anywhere. and multisig, so that no single employee or single key controls the assets. Myntkaup, for example, uses MPC technology from Fireblocks, so no single private key controls customer assets.
What does the law say?
A custodian serving customers in Iceland needs a licence as a crypto-asset service provider under MiCAMiCAThe EU regulation on markets in crypto-assets, in force in Iceland since 1 January 2026, which sets the same rules for crypto services across the EEA., which has applied here since 1 January 2026. Among other things, it must:
- keep customers' assets separate from its own, so its creditors can't claim them if it goes bankrupt
- be liable for losses caused by incidents attributable to it, such as a hack of its systems
That liability is capped at the market value of what was lost.
What are the risks?
You are trusting the custodian with your assets. If it is hacked, mismanages assets or stops withdrawals, you can run into trouble. That is why it matters to choose a licensed custodian. The alternative is Self-custodySelf-custodyHolding the private keys to your crypto in your own wallet, so nobody else controls it but all the responsibility for the keys is yours., where the keys are in your hands.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.