Funny question:

What’s the difference between "Custodial Wallet" and "Non-Custodial Wallet"?

A.🔒 Custodial = You own keys, Non-Custodial = Exchange owns keys
B. 💳 Custodial = Exchange owns keys, Non-Custodial = You own keys
C. 🤷‍♂️ No difference, just buzzwords
D. 🐢 It’s related to transaction speed

In a custodial wallet, a third party (like an exchange) holds your private keys and manages your crypto for you. In contrast, a non-custodial wallet gives you full control of your private keys and funds, meaning you are solely responsible for their security.

Fun Fact About Wallets

The phrase "Not your keys, not your crypto" is a popular saying in the crypto world, emphasizing the importance of using non-custodial wallets to maintain full ownership of your assets. However, custodial wallets are often preferred by beginners for their ease of use and recovery options.

💳 Custodial = Exchange owns keys, Non-Custodial = You own keys

Reference 

https://tangem.com/en/blog/post/custodial-vs-non-custodial-wallets/

https://appinventiv.com/blog/custodial-vs-non-custodial-wallets/

https://www.moonpay.com/learn/blockchain/custodial-vs-non-custodial-wallets