Custodial vs non-custodial exchanges

Non-custodial vs custodial. The bottom line here is custodial type exchanges do not allow the withdrawal of crypto assets. You must first exchange your crypto assets back into a fiat currency (U.S. dollars) before you can withdrawal funds. There are certain benefits and securities to this however most do not prefer this idea as you must first sell off all or part of an investment on the same platform. Non-custodial is a type of exchange you may withdrawal any assets you've invested in. If one intends to buy and trade, it's recommended to use non-custodial platforms as trading back to a fiat currency is a taxable event that may catch up to you.

This becomes especially important when you plan on investing long term. Though custodial exchanges may be more known throughout the general public, if you plan to hold your crypto as a long term investment, as a general rule, its not recommended to leave it on any exchange longer than you have to. With custodial exchanges this creates a problem as you cannot withdraw crypto from them. The very word "custodial" suggests they "hold your crypto for you". However, if you plan to trade a bit (or a lot) custodial exchanges can come with a lot of benefits. Some with lower trading fees. Some are more established and some have no issue staying current on regulations allowing for peace of mind. There's no worry that one day they'll be asking you to withdraw your crypto as a direct result to regulations.

So what should we choose here? Honestly, and with full transparency, I use both. Though the idea of transferring my own crypto off a platform at any time always sells itself in the end.