Whoever holds a wallet's private key — or the seed phrase it comes from — controls the tokens in it. With self-custody that's you: nobody can freeze your tokens, and nobody can recover them if the key is lost, stolen or typed into the wrong website. Transactions can't be reversed. Watching a wallet on the website's Portfolio page only needs a public address, which is safe to share, and it refuses anything that looks like a private key or seed phrase.
Leaving tokens on an exchange means the exchange holds the keys and you hold a promise — a counterparty relationship. That's exchange risk: if the exchange is hacked, freezes withdrawals or fails, your tokens can become part of its losses, as FTX's customers found in 2022. The FSCS doesn't cover cryptoassets, and as of 2026 many crypto firms serving UK customers are registered with the FCA only for anti-money-laundering checks, not authorised to the standard of a bank or broker. If the exchange fails, you may get back some, all or none of what you held.
Lose the key and the tokens are gone. Lose the exchange and the promise may be worth nothing.
Educational content only. It is not personal financial advice.