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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value of the Shares: • A reduction in staked ether on the Ethereum Network could increase the likelihood of a malicious actor obtaining control of the network. • Validators have historically accepted relatively low transaction confirmation fees on most crypto asset networks. If validators demand higher transaction fees for recording transactions in the Ethereum blockchain or a software upgrade automatically charges fees for all transactions on the Ethereum Network, the cost of using ether may increase and the marketplace may be reluctant to accept ether as a means of payment. Alternatively, validators could collude in an anti-competitive manner to reject low transaction fees on the Ethereum Network and force users to pay higher fees, thus reducing the attractiveness of the Ethereum Network. Higher transaction confirmation fees resulting through collusion or otherwise may adversely affect the attractiveness of the Ethereum Network, the value of ether and the value of the Shares.

•	To the extent that any validators cease to record transactions that do not include the payment of a transaction
fee in blocks or do not record a transaction because the transaction fee is too low, such transactions will not be recorded on the Ethereum
blockchain until a block is validated by a validator who does not require the payment of transaction fees or is willing to accept a lower
fee. Any widespread delays or disruptions in the recording of transactions could result in a loss of confidence in the Ethereum Network
and could prevent the Fund from completing transactions associated with the day-to-day operations of the Fund, including creations and
redemptions of the Shares in exchange for ether with Authorized Participants.

•	During the course of the block validation processes, validators exercise the discretion to select which
transactions to include within a block and in what order to include these transactions. Beyond the standard block reward and transaction
fees, validators have the ability to extract what is known as Maximal Extractable Value (MEV) by strategically choosing, reordering, or
excluding certain transactions during block production in return for increased transaction fees or other forms of profit for such validators.
In blockchain networks that facilitate DeFi protocols in particular, such as the Ethereum Network, users may attempt to gain an advantage
over other users by offering additional fees to validators for effecting the order or inclusions of transactions within a block. Certain
software solutions, such as MEV Boost by Flashbots, have been developed which facilitate validators and other parties in the ecosystem
in capturing MEV. The presence of MEV may incentivize associated practices such as sandwich attacks or front running that can have negative
repercussions on DeFi users. A “sandwich attack” is executed by placing two transactions around a large, detected transaction
to capitalize on the expected price impact. For instance, a market participant might identify a sizable
transaction within the so-called memory pool (mempool) that will significantly alter an asset’s price on a decentralized exchange.
The participant could then for example orchestrate a transaction bundle: one transaction to acquire the asset prior to the detected transaction,
followed by the large transaction itself, and a final transaction to sell the asset after the market price has increased due to the large
transaction’s execution. Such transaction bundles can be submitted to validators through mechanisms like MEV-Boost, with validators
receiving a share of the profits as an incentive to include the specific transaction bundle in the block. In the context of MEV, “front
running” is said to occur when a user spots a transaction in the publicly visible mempool of pending but unexecuted transactions
awaiting validation, and then pays a high transaction fee to a validator to have their transaction executed on a priority basis in a manner
designed to profit from the pending but unexecuted transaction that is still in the mempool. MEV may also compromise the predictability
of transaction execution, which may deter usage of the network as a whole. Although based on widely available information given that transactions
in the mempool are publicly visible, any potential perception of MEV as unfair manipulation may also discourage users and other stakeholders
from engaging with DeFi protocols or the Ethereum Network in general. In addition, regulators or legislators could enact rules which restrict
practices associated with MEV, which could diminish the popularity of the Ethereum Network among users and validators. Any of these or
other outcomes related to MEV may adversely affect the value of ether and the corresponding value of the Shares.

Layer 2 solutions on the Ethereum
Network were only recently conceived and may not properly function as intended, which could have an adverse impact on the value of ether

Layer 2 solutions are protocols built
on top of an underlying smart contract platform blockchain intended to provide scalability to the underlying blockchain by increasing
transaction efficiency. For example, Arbitrum is a smart contract platform protocol built on top of the Ethereum Network; it is intended
to provide scalability to Ethereum Network by allowing users to transact on a second blockchain deployed on the Ethereum Network. Under
this model, the Ethereum Network functions as the base layer, or “Layer 1” blockchain. Such solutions are intended to improve
upon the transaction speed, cost and efficiency of transactions on their respective Layer 1. Layer 2 solutions therefore rely, to various
degrees, on the functionality of the underlying Layer 1 blockchain.

The details of how this
is done vary significantly between different Layer 2 technologies and implementations. For example, “rollups” perform
transaction execution outside the Layer 1 blockchain and then post the data, typically in batches, back to the Layer 1 Ethereum
Network where consensus is reached. “Zero knowledge rollups” are generally designed to run the computation needed to
validate the transactions off-chain, on the Layer 2 protocol, and submit a proof of validity of a batch of transactions (not the
entire transactions themselves). By contrast, “optimistic rollups” assume transactions are valid by default and only run
computation, via a fraud proof, in the event of a challenge. Other proposed Layer 2 scaling solutions include, among others,
“state channels,” which are designed to allow participants to run a large number of transactions on the Layer 2 side
channel protocol and only submit two transactions to the main Layer 1 Ethereum Network (the transaction opening the state channel,
and the transaction closing the channel), “side chains,” in which an entire Layer 2 blockchain network with similar
capabilities to the existing Layer 1 Ethereum Network runs in parallel with the existing Layer 1 Ethereum Network and allows
smart contracts and DApps to run on the Layer 2 side chain without burdening the main Layer 1 network, and others. To date, the
Ethereum Network community has not coalesced overwhelmingly around any particular Layer 2 solution, though this could change. There
is no guarantee that any of the mechanisms in place or being explored for increasing the speed and throughput of settlement of
Ethereum Network transactions will be effective, or as to the length of time these mechanisms will take to become effective, which
could cause the Ethereum Network to not adequately resolve scaling challenges and adversely impact the adoption of ether and the
Ethereum Network and the value of the Shares. There is no guarantee that any potential scaling solution, whether a change to the
Layer 1 blockchain or the introduction of a Layer 2 solution like rollups, state channels or side chains, will achieve widespread
adoption. It is possible that proposed changes to the Layer 1 Ethereum Network could divide the community, potentially even causing
a hard fork, or that the decentralized governance of the Ethereum Network causes network participants to fail to coalesce
overwhelmingly around any particular solution, causing the Ethereum Network to suffer reduced adoption or causing users or
validators to migrate to other blockchain networks. It is also possible that scaling solutions could fail to work as intended or
could introduce bugs, coding defects or flaws, security risks, or other problems that could cause them to suffer operational
disruptions. For example, in multiple instances, the Arbitrum network experienced outages due to failures in its primary node
responsible for submitting transactions to Ethereum. Further, smart contracts deployed on one Layer 2 solution may not be
interoperable with smart contracts deployed on other Layer 2 solutions. In particular, the advent of Layer 2 solutions risks
fracturing liquidity of DeFi DApps on a smart contract platform’s mainchain by splitting such liquidity among multiple,
non-interoperable Layer 2 solutions, which could limit their use case or reduce efficiency. As Layer 2 solutions grow in popularity
and total value locked, these types of difficulties may lead to transactional congestion or forfeiture of value held on the Ethereum
Network, which in turn could have an adverse impact on the value of ether.

Liquid staking applications pose
centralization concerns, and a single liquid staking application has reportedly controlled around or in excess of 33% of the total staked
ether on the Ethereum Network