Custodial SMA platforms originally helped advisors get their first exposure to digital assets, but they come with structural limits. Alternatively, onchain SMAs and model portfolios expand the model to deliver full ownership, programmability, and operational efficiency.
Custodial SMAs deliver access: They allow advisors to allocate to crypto through managed accounts held with a custodian. While this centralizes custody, it comes with trade-offs: clients don’t directly own their assets, trading is limited to the custodian’s integrations, and product menus are often constrained. Liquidity, staking, and cross-chain capabilities are either unavailable or highly restricted. Clients with held-away assets are also unlikely to give up custody or transfer their assets to a traditional custodian.
Onchain SMAs go much further: They deliver direct, non-custodial ownership and unlock features custodial platforms can’t replicate:
Client ownership: Assets sit in client wallets, not in omnibus or segregated custody accounts. This preserves transparency, portability, and true self-custody. It also saves clients and advisors anywhere between 50bps to 100bps in custody fees per year.
Broader product menu: Advisors can build model portfolios across any tokenized asset class: crypto-native (BTC, ETH, SOL), yield strategies, indices, tokenized securities, DeFi vaults, and more—without being limited to a custodian’s whitelist.
24/7/365 liquidity: Allocations, rebalances, and withdrawals are executed onchain, outside the constraints of custodian operating hours or liquidity constraints.
Staking & DeFi income: Clients can capture staking rewards, liquidity provider fees, and other native onchain yield sources, compounding returns in ways custodial SMAs can’t.
Cross-chain management: Advisors can rebalance across Ethereum, L2s, and other supported chains programmatically, with built-in policy controls and audit trails.
Programmatic fees: Advisory fees can be embedded directly at the wallet level, reducing reconciliation overhead and ensuring transparent, scalable billing.
Operational efficiency: With smart-contract based controls, rebalancing, billing, and compliance reporting can be streamlined, cutting out manual middle-office work typical of custodial platforms.
In short: Custodial SMA platforms are a step toward digital asset access, but they replicate the limitations of legacy infrastructure. Onchain SMAs and model portfolios are a leap forward—client-owned, programmable, and unconstrained by custody bottlenecks—enabling advisors to deliver differentiated strategies at scale.
