How to Keep Control: Your Money vs The Bank’s Money

Key Takeaways

• Custodial accounts mean the bank owns and controls your money
• Traditional banks can freeze, move, or restrict access to custodial accounts
• With Renalta’s non-custodial stablecoin accounts, you custody your own assets
• Non-custodial means no one can take, freeze, or move your money without your permission

What is the difference between custodial and non-custodial accounts?

The fundamental question in banking isn’t how much interest you earn – it’s who actually controls your money.

Most people don’t realize that when you deposit money in a traditional bank, you’re technically lending it to the bank. They become the custodian, which means they own your deposits and you become a creditor with a claim to get your money back.

Non-custodial accounts flip this relationship. You maintain direct ownership and control of your assets. No institution can freeze them, move them, or restrict access without your explicit permission.

How do custodial accounts work?

When you deposit $1,000 in a traditional bank account, here’s what actually happens:

Legal ownership transfers to the bank. The bank now owns your $1,000. You hold an IOU – a promise that they’ll give you $1,000 back when you ask.

Bank controls access. They can freeze your account, place holds on deposits, or restrict withdrawals based on their policies or external requirements.

Your money funds their operations. The bank lends out your $1,000 to generate profits. You’re essentially an unsecured creditor in their business. You have no say in who they lend out money to, at what rate, and you cannot request this type of information.

Government protection required. FDIC insurance exists specifically because custodial banking carries the risk that the bank might not be able to return your money.

What are the risks of custodial banking?

Traditional custodial banking creates several risks most people never consider:

Account freezes: Banks can freeze accounts for suspected activity, legal disputes, or compliance issues

Access restrictions: Withdrawal limits, holds on deposits, or delayed transfers

Institutional risk: If the bank fails, you’re dependent on FDIC insurance (limited to $250,000)

Policy changes: Banks can change terms, add fees, or close accounts with minimal notice

You’re trusting the institution to act in your best interest, but their priorities are their shareholders and regulatory compliance – not necessarily your financial freedom.

Self-Custody Explained

A self custodial wallet, also known as a non-custodial wallet, is an account that gives you exclusive control over your assets. Self-custody ensures that you are the only person who can authorize transactions. This direct control means no institution or government can send, spend, freeze, or seize your funds without your permission.

Self-custody is particularly useful in scenarios such as government-imposed withdrawal restrictions, like those seen in Greece in 2015, or politically motivated financial censorship, most notably Operation Choke Point, where your assets remain secure and accessible only to you.

How do non-custodial stablecoin accounts work?

Non-custodial accounts operate on a completely different principle. With Renalta’s stablecoin accounts, you maintain direct ownership:

You control your private keys. Your assets are secured by cryptographic keys that only you possess. No one else can access or move your funds.

Note: The primary risk in using a self-custodial account is losing your private key. Each account has a unique private key that only the owner should ever see. While many applications offer passkeys or password recovery features to help you recover your private key, it is crucial to safeguard it.

Direct ownership. Your stablecoins aren’t IOUs from Renalta – they’re digital assets you directly own, like having cash in your wallet.

No freezing or restrictions. Since Renalta doesn’t custody your assets, we cannot freeze them, move them, or restrict your access. Your money remains under your complete control.

Transparent operations. You can see exactly where your assets are and how they’re generating returns through public blockchain records.