Scenario: You are a bank customer with a savings or checking account. You access this account with your email, password, and possibly two-factor authentication (2FA). The bank holds the actual assets and records your balance.

Self-Custody is Control: You access your bank account using login credentials, but the bank controls the financial system where your assets are stored. The bank has the authority to freeze your account or limit transactions based on regulatory requirements or internal policies. You are responsible for maintaining secure access to your account (e.g., using strong passwords and 2FA), while the bank is responsible for safeguarding your assets and complying with regulatory standards. Enforcement is handled by the bank’s systems, which can block transactions or freeze accounts when necessary, often based on government or regulatory orders.

Self-Custody is a Spectrum: The parties are you, the user, and the bank. The bank has an unfair advantage because it manages the assets and infrastructure. They can freeze your account, deny access, or limit transactions, while you are dependent on their services to access your own money. This lack of direct control places you low on the self-custody spectrum.

Self-Custody is Recursive: Bank accounts are central to managing your financial life, from receiving business payments to accessing loans or investment portfolios. The unfair advantage banks possess is their control over the financial infrastructure and their ability to freeze or restrict your account based on policies, regulations, or security concerns. If custody of your bank account is compromised—whether through a bank’s action you lose access to dependent constructs such as receiving payments for a business, paying bills, and managing investments. Moreover, any linked services like automatic payments for utilities or loan repayments can be disrupted, jeopardizing your financial standing and future creditworthiness.