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Questions RIAs Should Ask a Crypto Sub-Advisor

The questions RIAs should ask a crypto sub-advisor cover registration, who holds discretion, how digital assets are custodied, the investment process, reporting, fee disclosure, conflicts of interest, and compliance support. Together they let an adviser document a reasonable basis for the relationship before delegating any portion of client crypto exposure.

A crypto sub-advisor is a registered investment adviser that manages digital-asset portfolios on behalf of another RIA's clients, usually under a sub-advisory agreement. The primary adviser keeps the client relationship and fiduciary duty; the sub-advisor supplies the crypto-specific investment process, custody arrangements, and reporting. Due diligence is the adviser's documented evidence that delegation is reasonable. For background on the model, see what is crypto sub-advisory and the broader Crypto Services for RIAs Hub.

Questions to Ask

Use these grouped questions and record the answers, supporting documents, and the date.

Registration and standing

  • Are you registered as an investment adviser (SEC or state), and what is your CRD number?
  • Does your Form ADV Part 2 disclose any disciplinary history? (Registration alone does not guarantee skill or good outcomes, read the disclosures.)
  • What is the scope of your fiduciary duty under the sub-advisory agreement?

Discretion and authority

  • Who holds investment discretion, and is trading authority limited to specific assets or strategies?
  • Can you place trades without custody of client assets?

Custody

Investment process and reporting

  • What strategies or models are used, and how is the universe of eligible assets defined?
  • What reporting is available, how often, and does it reconcile to custodian records?

Fees, conflicts, and compliance

  • How are fees structured and disclosed, including any fee sharing between advisers?
  • What conflicts of interest exist (affiliated venues, token holdings, revenue arrangements), and how are they managed?
  • What compliance materials, policies, and audit results can you provide?
  • How do you support tax-lot reporting, cost-basis records, and estate or trustee handoffs?

Due Diligence Checklist

Before signing, confirm you have:

  • Verified registration and CRD record on the SEC's adviser-search system.
  • Reviewed Form ADV Parts 1 and 2 and any disclosure events.
  • Confirmed assets sit with a qualified custodian and reviewed SOC reports.
  • Documented who holds discretion and the limits on trading authority.
  • Obtained the fee schedule and any inter-adviser fee-sharing terms in writing.
  • Identified and assessed conflicts of interest.
  • Confirmed reporting reconciles to custodian statements.
  • Clarified tax-record and estate-handoff support.

How these pieces fit a full program is covered in crypto services for RIAs and investment advisors.

Ongoing Review

Due diligence does not end at onboarding. Review the sub-advisor on a set schedule for changes in process, performance, key personnel, custody arrangements, compliance posture, and service quality. Keep the review records alongside your initial file so the documented basis for the relationship stays current.

Related Questions

Does a crypto sub-advisor need to be a registered investment adviser?

Generally a firm managing client assets for compensation is acting as an investment adviser and is expected to register at the SEC or state level, depending on the facts. Confirm registration and review the Form ADV before delegating. Registration alone does not guarantee skill or good results.

Who is the qualified custodian in a crypto sub-advisory arrangement?

It depends on the arrangement. Under the SEC custody rule, client assets are generally expected to be held with a qualified custodian rather than the adviser. Ask where assets sit, review the custody architecture and SOC reports, and consult how to choose a crypto custodian and a qualified professional.

How often should an RIA review a crypto sub-advisor?

There is no single mandated interval, but advisers commonly conduct a periodic review at least annually and sooner when material changes occur. The cadence depends on the facts; document the review and the basis for it.

Sources

Compliance Note

This article is educational and does not provide legal, compliance, tax, investment, fiduciary, or custody advice. Digital assets carry market, custody, and tax risk; no sub-advisor or custody arrangement removes those risks, and crypto holdings are not FDIC- or SIPC-insured. RIAs should consult compliance counsel. 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.