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Crypto ADV Disclosure Requirements for RIAs

When an RIA offers crypto services, Form ADV Part 2A generally must disclose the digital asset strategy, its material risks, how assets are custodied, the fees charged, and any conflicts of interest, while Part 2B covers the background of the supervised persons giving the advice. Disclosure is meant to give clients a clear, balanced picture of the crypto offering and its risks. This is educational; a firm's specific filing obligations depend on its facts and should be confirmed with compliance counsel.

What Form ADV Disclosure Covers

Form ADV Part 2 is the narrative brochure an SEC- or state-registered adviser delivers to clients. Part 2A (the firm brochure) describes the advisory business, services, fees, and risks in plain English. Part 2B (the brochure supplement) describes the individuals who provide advice. Adding a crypto service generally touches several existing Part 2A items rather than creating a single new "crypto" section, so the disclosure has to be threaded through the brochure where each topic already lives.

The brochure is a disclosure document, not marketing. Claims inside it still fall under the SEC Marketing Rule and recordkeeping rules.

What an RIA Generally Discloses in Part 2A for Crypto

When a firm offers digital asset advice, the following items commonly need crypto-specific language:

  • Advisory business (Item 4). That the firm advises on digital assets, the scope, and whether it uses a crypto sub-advisor or model.
  • Fees and compensation (Item 5). How crypto positions are valued for billing, whether held-away or self-custodied crypto is billed, and any custodian or platform fees the client pays. Whether the firm can bill on assets it does not custody is its own analysis, covered in crypto held away from the advisor.
  • Methods of analysis, investment strategies, and risk of loss (Item 8). The crypto strategy and a balanced statement of material risks: volatility, custody/key loss, liquidity, regulatory uncertainty, valuation, and the absence of FDIC or SIPC coverage.
  • Custody (Item 15). Whether the SEC custody rule applies, how it is satisfied, and the qualified-custodian arrangement. The custody analysis is where crypto raises the hardest questions, summarized in the crypto compliance checklist for RIAs.
  • Conflicts of interest. Any compensation, affiliation, or platform relationship that could bias the crypto recommendation.

What Part 2B Covers for Crypto Advisers

Part 2B discloses the supervised persons who actually formulate or give crypto advice: their education, business background, any disciplinary history, other business activities, and how they are supervised. If a specific individual leads the digital asset strategy, their relevant experience and any conflicts belong here. Registration of a person or firm signals a regulatory baseline; it does not by itself demonstrate competence in digital assets.

Disclosure Checklist for a Crypto Offering

  • Item 4 describes the digital asset service and its scope.
  • Item 5 explains crypto valuation for billing and discloses platform/custodian fees.
  • Item 8 states the strategy and a balanced list of material crypto risks.
  • Item 15 addresses the custody-rule analysis and qualified-custodian arrangement.
  • Conflicts tied to crypto compensation or affiliations are disclosed.
  • Part 2B reflects the supervised persons giving crypto advice.
  • Any performance or capability claim is reviewed under the Marketing Rule.
  • The brochure is delivered and the changes logged under recordkeeping rules.

This checklist is illustrative and not a substitute for a compliance review of the firm's actual facts.

Related Questions

Do I need to amend Form ADV before offering crypto?

Generally a firm updates its brochure to reflect a material change in services, and adding a crypto offering is often material. The timing and mechanics depend on the firm's registration and facts, so confirm the amendment approach with compliance counsel before launching the service.

Where in Part 2A do crypto risks go?

Material risk of loss is typically disclosed in Item 8 alongside the strategy, with related custody and fee points in Items 15 and 5. The risks should be stated in balance with any benefit, consistent with the firm's crypto compliance checklist for RIAs.

Does using a sub-advisor change the disclosure?

It can. Engaging a crypto sub-advisor usually adds disclosure about the relationship, the division of responsibilities, fees, and conflicts, and the RIA generally retains oversight and due-diligence duties for that relationship.

How does ADV disclosure fit the wider RIA crypto picture?

ADV disclosure is the regulatory-filing layer of a broader operating model that also covers custody, model portfolios, and reporting, mapped in the crypto services for RIAs hub, and it sits next to how a firm chooses crypto model portfolios for financial advisors.

Sources

Compliance Note

This article is for general educational purposes for an advisor audience and is not legal, compliance, or investment advice. A firm's Form ADV obligations depend on its registration status and specific facts. Advisory services referenced are provided through DAG Wealth. Confirm all disclosure decisions with qualified compliance counsel before filing. Registration does not imply a certain level of skill or training.

Disclosures

DAG Holdings Co is a holding company that does not provide investment advisory, brokerage, administrative, or insurance services to clients. DAG is not a law firm, does not provide legal or tax advice, and does not provide tax preparation services. Tax matters are handled through referrals to qualified independent tax professionals.

DAG Private Client services involve estate matters that require qualified independent counsel in the applicable jurisdiction. LLC formation, trust drafting, and estate planning services are provided in coordination with or by qualified independent legal counsel licensed in the applicable jurisdiction.

Asset protection structures, including Wyoming LLCs and trusts, do not guarantee protection against all claims, creditors, or losses. Outcomes depend on specific facts, jurisdiction, and applicable law.

Insurance products and services are offered through Xure Insurance or its affiliates.

Investment advisory services are offered exclusively through DAG Wealth, an SEC-Registered Investment Adviser (CRD No. 328627). Registration with the SEC does not imply a particular level of skill or training. Form ADV and Form CRS are available upon request or at www.adviserinfo.sec.gov.

Custody arrangements with third-party independent qualified custodians reduce certain risks but do not eliminate them.

Investing in digital assets involves risk, including the possible loss of principal. Digital assets are highly volatile and may not be suitable for all investors. Past performance is not indicative of future results.

Specific fee schedules, scope of engagement, conflicts of interest, and material business practices are disclosed in writing before engagement and in Form ADV Part 2A for the investment-advisory portion.

The information on this site is for general educational purposes and is not legal or tax advice.