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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privileges, or “super users.” These users may have the ability to unilaterally make changes to the smart contract, enable or disable features on the smart contract, change how the smart contract receives external inputs and data or transmits ether or other crypto assets, and make other changes to the smart contract. Furthermore, in some cases inadequate public information may be available about certain smart contracts or applications, and information asymmetries may exist, even with respect to open-source smart contracts or applications; certain participants may have hidden informational or technological advantages, making for an uneven playing field. There may be opportunities for bad actors to perpetrate fraudulent schemes and engage in illicit activities and other misconduct, such as exit scams and rug pulls (orchestrated by developers and/or influencers who promote a smart contract or application and, ultimately, escape with the money at an agreed time), or Ponzi or similar fraud schemes.

Many DeFi applications are currently
deployed on the Ethereum Network, and smart contracts relating to DeFi applications currently represent a significant source of demand
for ether. DeFi applications may achieve their investment purposes through self-executing smart contracts that may allow users, for example,
to invest crypto assets in a pool from which other users can borrow without requiring an intermediate party to facilitate these transactions.
These investments may earn interest to the investor based on the rates at which borrowers repay the loan, and can generally be withdrawn
by the investor. For smart contracts that hold a pool of crypto asset reserves, smart contract super users or admin key holders may be
able to extract funds from the pool, liquidate assets held in the pool, or take other actions that decrease the value of the crypto assets
held by the smart contract in reserves. Even for crypto assets that have adopted a decentralized governance mechanism, such as smart contracts
that are governed by the holders of a governance token, such governance tokens can be concentrated in the hands of a small group of core
community members, who would be able to make similar changes unilaterally to the smart contract. If any such super user or group of core
members unilaterally make adverse changes to a smart contract, the design, functionality, features and value of the smart contract, its
related crypto assets may be harmed. In addition, assets held by the smart contract in reserves may be stolen, misused, burnt, locked
up or otherwise become unusable and irrecoverable. Super users can also become targets of hackers and malicious attackers. If an attacker
is able to access or obtain the super user privileges of a smart contract, or if a smart contract’s super users or core community
members take actions that adversely affect the smart contract, users who transact with the smart contract may experience decreased functionality
of the smart contract or may suffer a partial or total loss of any crypto assets they have used to transact with the smart contract. Furthermore,
the underlying smart contracts may be insecure, contain bugs or other vulnerabilities, or otherwise may not work as intended. Any of the
foregoing could cause users of the DeFi application to be negatively affected, or could cause the DeFi application to be the subject of
negative publicity. Because DeFi applications may be built on the Ethereum Network and represent a significant source of demand for ether,
public confidence in the Ethereum Network itself could be negatively affected, such sources of demand could diminish, and the value of
ether could decrease. Similar risks apply to any smart contract or decentralized application, not just DeFi applications.

Validators may suffer losses due
to staking, which could make the Ethereum Network less attractive

Validation on the Ethereum Network
requires ether to be transferred into smart contracts on the underlying blockchain networks not under the Fund’s or anyone else’s
control. If the Ethereum Network source code or protocol fail to behave as expected, suffer cybersecurity attacks or hacks, experience
security issues, or encounter other problems, such assets may be irretrievably lost. In addition, the Ethereum Networks dictate requirements
for participation in validation activity, and may impose penalties, or “slashing,” if the relevant activities are not performed
correctly, such as if the staker acts maliciously on the network, “double signs” any transactions, or experience extended
downtimes. If validators’ staked ether is slashed by the Ethereum Network, their assets may be confiscated, withdrawn, or burnt
by the network, resulting in losses to them. Furthermore, the Ethereum Network requires the payment of base fees and the practice of paying
tips is common, and such fees can become significant as the amount and complexity of the transaction grows, depending on the degree of
network congestion and the price of ether. Any cybersecurity attacks, security issues, hacks, penalties, slashing events, or other problems
could damage validators’ willingness to participate in validation, discourage existing and future validators from serving as such,
and adversely impact the Ethereum Network’s adoption or the price of ether. Any disruption of validation on the Ethereum Network
could interfere with network operations and cause the Ethereum Network to be less attractive to users and application developers than
competing blockchain networks, which could cause the price of ether to decrease.

Proof of Stake (PoS) blockchains
are a relatively recent innovation, and may not achieve widespread scale or adoption or perform as successfully as traditional proof-of-work
blockchains

Certain crypto assets,
such as bitcoin, use a “proof-of-work” consensus algorithm. The genesis block on the Bitcoin blockchain was mined in
2009, and Bitcoin’s blockchain has been in operation since then. Many newer blockchains enabling smart contract functionality,
including the current Ethereum Network uses PoS. While their proponents believe that they may have certain advantages, the PoS
consensus mechanisms and governance systems underlying many newer blockchain protocols, including the Ethereum Network following the
Merge, and their associated crypto assets — including the ether held by the Fund — have not been tested at scale over as
long of a period of time or subject to as widespread use or adoption as, for example, bitcoin’s proof-of-work consensus
mechanism has. This could lead to these blockchains, and their associated crypto assets, having undetected vulnerabilities,
structural design flaws, suboptimal incentive structures for network participants (e.g., validators), technical disruptions, or a
wide variety of other problems, any of which could cause these blockchains not to function as intended, lead to outright failure to
function entirely causing a total outage or disruption of network activity, or to suffer other operational problems or reputational
damage, leading to a loss of users or adoption or a loss in value of the associated crypto assets, including the Fund’s
assets. There can be no assurance that the PoS blockchain on which the Fund’s assets rely will achieve widespread scale or
adoption or perform successfully; any failure to do so could negatively impact the value of the Fund’s assets.

If the crypto asset award or transaction
fees for recording transactions on the Ethereum Network are not sufficiently high to incentivize validators, or if certain jurisdictions
continue to limit or otherwise regulate validating activities, validators may cease expanding validating power or demand high transaction
fees, which could negatively impact the value of ether

In 2021, the Ethereum Network implemented
the EIP 1559 upgrade. EIP 1559 changed the methodology used to calculate transaction fees paid to ether validators in such a manner that
reduced the total net issuance of ether fees paid to validators. If the crypto asset awards for validating blocks or the transaction fees
for recording transactions on the Ethereum Network are not sufficiently high to incentivize validators, or if certain jurisdictions continue
to limit or otherwise regulate validating activities, validators may cease expending validating power to validate blocks and confirmations
of transactions on the Ethereum Network could be slowed. For example, the realization of one or more of the following risks could materially
adversely affect the 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.