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

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fees become too high, the marketplace may be reluctant to use bitcoin. This may result in decreased usage and limit expansion of the Bitcoin Network in the retail, commercial and payments space, potentially adversely impacting investment in the Fund. Conversely, if the Mining Subsidy or the value of the transaction fees is insufficient to motivate miners, they may cease expending processing power to solve blocks and confirm transactions. Ultimately, if the awards of new bitcoin for solving blocks declines and transaction fees for recording transactions are not sufficiently high to incentivize miners, or if the costs of validating transactions grow disproportionately, miners may operate at a loss, transition to other networks, or cease operations altogether. Each of these outcomes could, in turn, slow transaction validation and usage, which could have a negative impact on the Bitcoin Network and could adversely affect the value of the bitcoin held by the Fund.

An acute cessation of mining operations
would reduce the collective processing power on the Bitcoin Network, which would adversely affect the transaction verification process
by temporarily decreasing the speed at which blocks are added to the blockchain and make the blockchain more vulnerable to a malicious
actor obtaining control in excess of 50% of the processing power on the blockchain. Reductions in processing power could result in material,
though temporary, delays in transaction confirmation time. Any reduction in confidence in the transaction verification process or mining
processing power may adversely impact the value of Shares of the Fund or the ability of the Sponsor to operate.

Bitcoin ownership is concentrated
in a small number of holders, causing vulnerability to bitcoin

A significant portion of bitcoin is
held by a small number of holders who have the ability to affect the price of bitcoin and who are sometimes referred to as “whales.”
Because bitcoin is lightly regulated, bitcoin whales have the ability, alone or in coordination, to manipulate the price of bitcoin by
restricting or expanding the supply of bitcoin. Activities of bitcoin whales that reduce user confidence in bitcoin, the Bitcoin Network
or the fairness of bitcoin trading venues, or that affect the price of bitcoin, could have a negative impact on the value of an investment
in the Fund.

Increased transaction fees may adversely
affect the usage of the Bitcoin Network

Bitcoin miners collect fees for each
transaction they confirm. Miners validate unconfirmed transactions by adding the previously unconfirmed transactions to new blocks in
the blockchain. Miners are not forced to confirm any specific transaction, but they are economically incentivized to confirm valid transactions
as a means of collecting fees. Miners have historically accepted relatively low transaction confirmation fees, because miners have a very
low marginal cost of validating unconfirmed transactions. If miners collude in an anticompetitive manner to reject low transaction fees,
then bitcoin users could be forced to pay higher fees, thus reducing the attractiveness of the Bitcoin Network. Bitcoin mining occurs
globally, and it may be difficult for authorities to apply antitrust regulations across multiple jurisdictions. Any collusion among miners
may adversely impact an investment in the Fund or the ability of the Fund to operate. Similarly, increased transaction costs or efforts
on any crypto asset network may adversely impact the price of the crypto asset.

Sales of newly minted bitcoin cause
the price of bitcoin to decline, which could negatively affect an investment in the Fund

Newly created bitcoin is generated
through a process referred to as “mining.” If entities engaged in bitcoin mining choose not to hold the newly mined bitcoin,
and, instead, make it available for sale, there can be downward pressure on the price of bitcoin. A bitcoin mining operation may be more
likely to sell a higher percentage of its newly created bitcoin, and more rapidly so, if it is operating at a low profit margin, thus
reducing the price of bitcoin. Lower bitcoin prices may result in further tightening of profit margins for miners and decreasing profitability,
thereby potentially causing even further selling pressure. Diminishing profit margins and increasing sales of newly mined bitcoin could
result in a reduction in the price of bitcoin, which could adversely impact an investment in the Shares. Similarly, other newly minted
crypto assets may increase the supply of that crypto asset, creating downward pressure on the price of the crypto asset.

Limited adoption and ability to
use bitcoin to purchase goods contribute to price volatility

Currently, there is relatively limited
use of bitcoin in the retail and commercial markets in comparison to relatively extensive use as a store of value, thus contributing to
price volatility of bitcoin that could adversely affect the Fund’s Shares. Banks and other established financial institutions may
refuse to process funds for bitcoin transactions; process wire transfers to or from bitcoin trading venues, bitcoin-related companies
or service providers; or maintain accounts for persons or entities transacting in bitcoin or providing bitcoin-related services. Similarly,
the limited adoption and ability to use any crypto asset as anything other than a store of value may contribute to price volatility.

Environmental risks from mining bitcoin
could adversely affect the price of bitcoin

Mining bitcoin currently requires computing
hardware that consumes large amounts of electricity. By way of electrical power generation, many miners rely on fossil fuels to power
their operations. Public perception of the impact of mining on climate change may reduce demand for the crypto assets and increase the
likelihood of regulation that limits mining or restricts energy usage by miners, which could result in a significant reduction in mining
activity and adversely affect the security of the Bitcoin network and could adversely affect the price of bitcoin and the value of the
Shares.

The “proof of work” validation
mechanism used to verify transactions on the Bitcoin Network necessitates that bitcoin miners maintain high levels of computing power,
which can require extremely high energy usage. Although measuring the electricity consumed by this process is difficult because these
operations are performed by various machines with varying levels of efficiency, the process consumes a significant amount of energy. Further,
in addition to the direct energy costs of performing these calculations, there are indirect costs that impact the Bitcoin Network’s
total energy consumption, including the costs of cooling the machines that perform these calculations. A significant decrease in the computational
resources dedicated to the Bitcoin Network’s validation protocol could reduce the security of the network which may erode bitcoin’s
viability as a store of value or means of exchange.

Several alternative mechanisms to proof-of-work
have emerged in recent years, aiming to offer more energy-efficient validation processes for blockchain networks and high costs of electricity
may incentivize miners to redirect their capital and efforts to other validation protocols, such as PoS blockchains, in which rather than
using computational power to add new blocks of transactions to the blockchain, users pledge capital denominated in the network’s
native currency as a guarantee of action in good faith when producing blocks. Alternatively, miners can abandon their validation activities
altogether.

Due to concerns around energy consumption
and associated environmental concerns, particularly as such concerns relate to public utilities companies, various countries, states and
cities have implemented, or are considering implementing, moratoriums on bitcoin mining in their jurisdictions. Such moratoriums would
impede crypto asset mining and/or crypto asset use more broadly. For example, in November 2022, New York imposed a two-year moratorium
(that has since expired) on new proof-of-work mining permits at fossil fuel plants in the state.

Depending on how future regulations
are formulated and applied, such policies could have the potential to negatively affect the price of bitcoin, and, in turn, the value
of the Shares. Increased regulation and the corresponding compliance cost of these regulations could additionally result in higher barriers
to entry for bitcoin miners, which could increase the concentration of the hash rate, potentially having a negative impact on the price
of bitcoin.

Risks Related to Ether and the Ethereum
Network

Ethereum Network and ether developments
may impact ether prices

Moving from Proof-of-Work to Proof-of-Stake
Consensus Mechanism. In September 2022, the Ethereum Network moved from a proof-of-work to a PoS mechanism during an upgrade known
as “The Merge.” Unlike proof-of-work, in which miners expend computational resources to compete to propose blocks of transactions
and be rewarded coins in proportion to the number of computational resources expended, in PoS, validators pledge or “stake”
coins to compete to be randomly selected to validate transactions and be rewarded coins in proportion to the total amount of coins staked.
Any malicious activity, such as proposing multiple blocks at the same validation time, voting on two different versions of the consensual
chain or otherwise violating protocol rules, results in the forfeiture or “slashing” of a portion of the staked coins.

Due to the absence of employed computation
resources, PoS is viewed as more energy efficient than proof-of-work. In addition, PoS allows for the implementation of scaling solutions
such as sharding, which parallelizes transaction registry and code execution in the network and aims to increase speeds and reduce fees.