SEC Filing Document

Company: T. Rowe Price Active Crypto ETF
Ticker: 
CIK: 2089855
Filing Type: S-1
Document Type: S-1
Date Filed: 2025-10-22
Accession Number: 0001999371-25-015832
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2089855/000199937125015832/activecrypto-s1_102225.htm

Chunk 20 of 56
Word Count: 1483
Character Count: 9196

Document Content:

as in the case of Ethereum Network and Ethereum Classic. Furthermore, a hard fork can lead to new security concerns, for example, also, during the DAO attack an Ethereum trading platform announced in July 2016 that it had lost 40,000 Ethereum Classic, worth about $100,000 at that time, as a result of “replay attacks,” in which transactions from one network were rebroadcast on the other network. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of validating power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual validator or validating pool’s validating power to exceed 50% of the validating power of a crypto asset network that retained or attracted less validating power, thereby making crypto asset networks that rely on PoS more susceptible to attack.

The announcement of a hard fork could
also lead to increased demand for the pre-fork crypto asset, in anticipation that ownership of the pre-fork crypto asset would entitle
holders to a new crypto asset following the fork. The increased demand for the pre-fork crypto asset may cause the price of the crypto
asset to rise. After the hard fork, it is possible the aggregate price of the two versions of the crypto asset running in parallel would
be less than the price of the crypto asset immediately prior to the fork. For example, following the DAO hack in July 2016, holders of
ether voted on-chain to reverse the hack, effectively causing a hard fork. For the days following the vote, the price of ether rose from
$11.65 on July 15, 2016 to $14.66 on July 21, 2016, the day after the first Ethereum Classic block was mined.

The Fund will adhere to the policies
outlined by the Crypto Custodian, which may be updated without prior notice to the Sponsor or the Fund. The Crypto Custodian may not support
forks and airdrops, and the Fund and the Sponsor may not be able to use its custodial account to attempt to receive, request, send, store,
or engage in any other type of transaction involving a new version of any “forked” asset held by the Fund. In the event of
a fork, the Crypto Custodian may temporarily suspend operations with respect to the affected asset (with or without advance notice to
the Sponsor and/or the Fund) and decide whether to support (or cease supporting) either branch of the forked protocol entirely. Additionally,
in case of support, it may take significant time for the Crypto Custodian to implement or provide access to any asset created because
of a fork, and the Fund will only be able to account for the forked asset after it is given access by the Crypto Custodian. The Crypto
Custodian assumes absolutely no liability whatsoever in respect of an unsupported branch of a forked protocol or its determination whether
to support a forked protocol. The Crypto Custodian is under no obligation to support any airdrops or forks, or handle them in any manner,
which could adversely impact the value of an investment in the Fund.

In addition to forks, a crypto asset
may become subject to an airdrop. In an airdrop, the promoters of a new crypto asset announce to holders of another crypto asset that
such holders will be entitled to claim a certain amount of the new crypto asset for free, based on the fact that they hold such other
crypto asset. Airdrops could create operational, security, legal or regulatory, or other risks for the Fund, the Sponsor, the Crypto Custodian,
Authorized Participants, or other entities.

With respect to any fork, airdrop,
or similar event, or other Incidental Rights and/or IR Virtual Currency, the Sponsor shall, in its sole discretion, decide what action
the Fund shall take. Such actions that the Fund may take include to irrevocably abandon, claim, or sell such crypto asset, Incidental
Right, or IR Virtual Currency, so long as such action is consistent with the Fund’s policies and custodial policies, does not adversely
affect the status of the Fund as a partnership for U.S. federal income tax purposes, or is not otherwise prohibited by law. In the event
of a fork or airdrop, the Sponsor will determine which network it believes is the appropriate network for the new crypto asset, and whether
the new crypto asset qualifies as an Eligible Asset for the Fund’s purposes. The Sponsor may provide instructions to the Crypto
Custodian regarding forks and airdrops, and any decisions or actions related to airdrops or forks involving the Fund’s assets will
align with the Fund policies and guidelines set forth by the Crypto Custodian. Such decisions regarding hard forks and airdrops may adversely
affect the Fund, which in turn would have a negative effect on the value of the Shares. There are likely to be operational, tax, securities
law, regulatory, legal and practical issues that significantly limit, or prevent entirely, Shareholders’ ability to realize a benefit,
through their Shares in the Fund, from any airdrop, fork or similar event.

The Eligible Assets Networks may
face scalability challenges as they expand to a greater number of users

As with other crypto
asset networks, the Eligible Asset Networks face significant scaling challenges because public blockchains generally face a tradeoff
between security and scalability. A network is typically less susceptible to manipulation or capture if more participants, or
“nodes,” are involved in the processing and maintenance of such network. However, a greater number of nodes may decrease
the network’s efficiency in processing transactions and may result in increased settlement times. Increased settlement times
could discourage certain uses for crypto assets such as bitcoin and ether (for example, micropayments), and could reduce demand for
and price of such asset, which could adversely impact the value of an investment in the Fund.

Crypto Asset Markets are susceptible
to theft, loss and destruction

The Eligible Assets are susceptible
to theft, loss and destruction. Crypto assets, and the platforms they trade on and their custodians (and similar market participants or
service providers) are also vulnerable to cyberattacks and breaches, which could lead to theft or loss of assets. A cyber security breach
or a business failure of a crypto asset platform or custodian (and similar market participants or service providers) could result in a
loss of public confidence in the Eligible Assets, a decline in the value of the Eligible Assets and, as a result, adversely impact the
Fund’s Shares. A breach or failure of one crypto asset or network may lead to a loss in confidence in, and thus decreased usage
and/or value of, other crypto assets or networks, including the Eligible Asset Networks.

Holdings of crypto assets may be
heavily concentrated and large sales or distributions by holders of such crypto assets could have an adverse effect on the market price
of such crypto assets

The largest crypto wallets are believed
to hold, in aggregate, a significant percentage of the Eligible Assets in circulation. Moreover, it is possible that other persons or
entities control multiple wallets that collectively hold a significant number of Eligible Assets, even if they individually only hold
a small amount, and it is possible that some of these wallets are controlled by the same person or entity. As a result of this concentration
of ownership, large sales or distributions by such holders could have an adverse effect on the market price of Eligible Assets.

Crypto trading platforms may be
largely unregulated or may be largely or entirely non-compliant with applicable regulation and may therefore be more exposed to fraud
and failure

The Fund intends to trade Eligible
Assets primarily over-the-counter. To the extent that the Fund trades Eligible Assets on crypto platforms and other trading venues, these
crypto trading platforms are relatively new. In addition, crypto trading platforms may be lightly regulated, unregulated, or may be non-compliant
with existing and applicable regulations in one or more jurisdictions in which they operate. Furthermore, while some prominent crypto
platforms provide the public with significant information regarding their ownership structure, management teams, corporate practices and
regulatory compliance, many other crypto platforms may not provide some or any such information. Crypto trading platforms may not view
themselves as being subject to, or may not comply with, regulation in a similar manner as other regulated trading platforms, such as national
securities exchanges or designated contract markets. As a result, the marketplace may lose confidence in crypto platforms, including prominent
platforms that handle a significant volume of the Eligible Assets’ trading.

Trading activity on or reported by
many crypto trading platforms may reflect behavior that would be prohibited in regulated U.S. trading venues. Any actual or perceived
false trading in the crypto platforms market, and any other fraudulent or manipulative acts and practices, could adversely affect the
value of the Eligible Assets and/or negatively affect the market perception of the Eligible Assets.