Crypto wallet vs exchange: where to keep your crypto

With custodial storage, a platform holds your assets and the associated keys for you — much like a bank holds your money. With self-custody, you hold the keys yourself in a wallet (e.g. a hardware or software wallet), and only you have access.

Both have advantages. Custodial is simple and offers support and recovery; self-custody gives full control, but also full responsibility.

A regulated CASP under MiCA must keep client assets in segregated custody — separate from the company’s own funds — and is supervised. That reduces counterparty risk compared with an unregulated exchange.

Penning uses segregated EU custody and is supervised by the Danish FSA. You can also withdraw your assets to your own wallet at any time. Read more on our security & compliance page.

With self-custody there is no intermediary — but if you lose your seed phrase or keys, there is no "forgot password". You are responsible for security, backups and avoiding phishing.

Many people use a combination: a regulated platform to buy and trade, and their own wallet for long-term storage of larger holdings.

If you want simplicity, support and regulation, a custodial CASP is a good starting point. If you want maximum control and are comfortable managing keys and backups yourself, self-custody may suit you.

Either way: use a regulated platform to buy and trade, verify its authorisation, and understand the risk of the crypto asset itself.