What is the difference between a custodial wallet and a non-custodial wallet?

Private keys to custodial wallets are stored and managed by a third party on behalf of their owner. This means that the wallet owner does not have full control over his assets and cannot independently sign transactions. An example is wallets on cryptocurrency exchanges. Non-custodial wallets do not need intermediaries when interacting with the blockchain. Only the wallet owner has access to private keys and independently controls them. Non-custodial wallets are required for traders who use DApps and trade on the DEX.