In the financial context, a custodian refers to a business or institution that holds and safeguards financial assets for individuals or organizations.
This service is typically provided by brokerage firms, commercial banks, or similar entities to ensure the security and protection of money and assets.
Account Management and Services
Financial custodians, also known as bank custodians, have physical control over various financial accounts, including checking, savings, money market, and retirement (e.g., 401(k)) accounts.
When you deposit funds into any of these accounts, your custodian takes possession of the money and assigns it to your account number.
Safeguarding Assets and Securities
The fees charged by custodians can vary based on the services requested and may include quarterly fees based on the total value of the assets under custody.
Large and reputable organizations commonly provide these custodial services that handle the security of assets and securities worth millions or billions of dollars.
Custodians can also be designated to manage the assets of a minor child and are frequently employed by investment advisory firms to safeguard their clients’ funds.
Cryptocurrency custodians offer self-contained security and storage systems to keep digital assets safe.
Their services primarily cater to institutional clients with substantial cryptocurrency holdings.
These custodians employ a combination of hot and cold storage methods to ensure the security of cryptocurrencies.