Ethereum

What counts as self-custody?

I've seen orgs ship what's effectively a 2-of-3 multisig or MPC where they keep 2 of the 3 shares. While arguing that this is still noncustodial for legal purposes!

This allows nice UX like phone or email recovery.

No judgement, just curiosity: does that work?

Daimo Pay. Build once, distribute everywhere

For sure.
Typically 2/3 mpc will require the user share, so the provider cannot initiate, only co-sign.
Non-custodial means provider does not custody; not necessarily that the user holds the keys.

Typically this can be "non-custodial" still, but does introduce censorship/coercion risk in favor of UX/recovery safety. Storing an encrypted backup of a key doesn't constitute custody b/c it can't be used without changing the rules of the system (but, changing the rules could be possible..)

In the cases I'm talking about, they *dont* require the user share.

How do I know? 

Because the user can recover their account with just email or phone auth.