T. Rowe Price, a prominent asset manager known for its conservative approach and substantial holdings in traditional finance, has surprised industry observers by filing for an actively managed cryptocurrency exchange-traded fund (ETF) in the United States. This move could significantly alter the landscape of its investment products, which have historically been dominated by mutual funds. The mutual fund sector has experienced substantial outflows, losing billions of dollars in recent weeks.
The registration statement, submitted to the Securities and Exchange Commission (SEC), outlines the fund's intention to hold between five and fifteen cryptocurrencies. These digital assets must meet the SEC's generic listing standards, a category that includes major cryptocurrencies such as Bitcoin (BTC), Ether (ETH), Solana (SOL), and XRP.
Nate Geraci, President of NovaDius Wealth Management, described the filing as unexpected, suggesting that established asset managers like T. Rowe Price, who were not part of the initial wave of crypto ETF launches, are now actively seeking their place in this emerging market.
Bloomberg ETF analyst Eric Balchunas echoed this sentiment, calling the filing a "SEMI-SHOCK." He highlighted that T. Rowe Price, with its nearly $1.8 trillion in assets under management and an 87-year history predominantly focused on mutual funds, represents a significant entry into the crypto ETF space.
"Did not expect it but I get it. There’s gonna be land rush for this space too."
Asset Weighting to Consider More Than Market Size
T. Rowe Price's proposed fund aims to outperform the FTSE Crypto US Listed Index. According to the filing, the weighting of assets within the fund will be determined by factors such as fundamentals, valuation, and momentum, rather than solely by market capitalization.
The list of eligible cryptocurrencies for inclusion in T. Rowe's fund extends beyond the initial mentions to include Cardano (ADA), Avalanche (AVAX), Litecoin (LTC), Dogecoin (DOGE), Hedera (HBAR), Bitcoin Cash (BCH), Chainlink (LINK), Stellar (XLM), and Shiba Inu (SHIB).
This actively managed approach distinguishes T. Rowe's Active Crypto ETF from many other single-cryptocurrency ETF applications that are currently awaiting SEC approval.
While Hong Kong has recently approved its first spot Solana ETF, the United States has seen numerous ETF applications, including those for LTC, SOL, and XRP, held up due to the ongoing government shutdown, which has now entered its 22nd day. Kevin Hassett, an economic adviser to US President Donald Trump, indicated on Monday that the shutdown is likely to conclude this week.
T. Rowe Price's Evolving Stance on Crypto
Over four years ago, William Stromberg, the former CEO of T. Rowe Price, described cryptocurrency as being in its "early days" when questioned about the company's potential investment in the asset class. At the time, he stated, "It really truly is early, early days here so I would expect this to move at a good pace but take years to really unfold." This indicates a gradual shift in the firm's perspective towards digital assets.