Unhosted Wallet

Overview

The term is commonly used in regulatory and compliance discussions to distinguish user-controlled wallets from accounts hosted by exchanges or custodians. The wallet may run on software, hardware, a smart contract, or shared-control infrastructure while preserving user authority.

Unhosted does not mean anonymous, offline, or secure. Blockchain activity can remain public, interfaces and nodes may be provided by third parties, and recovery or upgrade authority may be shared. Loss, malware, phishing, or exposed backups can still compromise assets. Terminology and legal treatment vary by jurisdiction.

Users should understand every signer, administrator, recovery path, and service dependency. Keys or recovery material need appropriate protection and tested restoration. Organizations interacting with an unhosted wallet may apply risk-based address verification or compliance procedures. Those checks should distinguish proof of control from legal ownership and avoid collecting seed phrases or private keys.

The Unhosted Wallet workflow operates through several distinct states: request creation, user or policy approval, signature generation, network submission, execution, confirmation, balance recognition, and accounting. For Unhosted Wallet, a wallet interface or provider response can report progress, but it cannot replace verified transaction and ledger evidence.

Unhosted Wallet should be distinguished from the asset balance and from the application that displays it. For example, a customer-facing success message does not prove that the intended transaction executed on the correct network; operations should verify execution and reconcile the result before irreversible fulfillment.

Records for Unhosted Wallet should preserve account and address identifiers, asset and network identity, policy version, requester, approvers, signed payload or transaction reference, fees, timestamps, status history, confirmations, exceptions, and final balance and accounting effects. For Unhosted Wallet, corrections must remain linked rather than overwrite the original event.