This question gets to the heart of one of crypto's most important lessons, and understanding it helps you decide where to keep your funds.
When you hold crypto on an exchange, you do not personally control the private keys. The exchange does. You have an account balance, a promise that the exchange owes you that crypto, much like a bank owes you the money in your account. As long as the exchange is healthy, that works smoothly. But if it fails, freezes withdrawals, or is mismanaged, funds you left on it can become inaccessible or be lost, and getting them back can be uncertain and slow.
This is exactly the reasoning behind the well-known phrase: not your keys, not your coins. If you do not hold the keys, you are trusting someone else to safeguard your crypto.
Understanding this trade-off lets you choose deliberately. Many people keep only what they are actively using on an exchange and move longer-term holdings into a wallet they control themselves.
