What Non-Custodial Means
Custody is about who holds the funds and controls access to them. A custodial provider takes your money onto its own books and moves it on your behalf. A non-custodial provider does not: it supplies the technology that routes and coordinates the settlement, while the funds sit with regulated institutions.
That is Modality's model. Modality is the technology layer between your business and licensed institutional partners. Modality routes settlement but never holds your funds. Licensed partners do.
What It Changes, and What It Doesn't
What it changes
Your funds are not sitting inside a technology vendor. Regulated custody stays with licensed institutions, and the provider is not in a position to compete with you for your customer or to become a single point through which your balances are held.
What it doesn't change
Non-custodial is not the same as risk-free or check-free. Stablecoins carry their own issuer and reserve risk, which you should understand for each asset you settle in. Compliance obligations still apply, and with Modality they are carried out by the licensed partners. And it does not mean self-custody: your business is not asked to run wallets or keys.
Questions to Ask Any Provider
| Question | Why it matters |
|---|---|
| Who actually holds the funds at each step? | "Non-custodial" should come with named institutions. |
| What licences do those institutions hold, and where? | Regulation follows the entity holding the funds. |
| How are balances safeguarded? | Segregation and safeguarding arrangements differ. |
| Which stablecoins do you settle in, and why? | Issuer and reserve risk differ per asset. |
For the wider comparison, see non-custodial vs custodial stablecoin: who actually holds your money.
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FAQ
What does non-custodial mean for stablecoin settlement?
The provider does not hold your funds. It provides the technology that routes settlement, while licensed institutional partners hold the funds.
Does non-custodial mean no compliance?
No. Compliance checks still apply and are carried out by the licensed partners.
Do I have to manage wallets or keys myself?
No. Non-custodial here does not mean self-custody; your business is not asked to run wallets or hold keys.