Surprise filing: T. Rowe Price enters crypto ETF race with multi-asset strategy

Key Takeaways

What makes this ETF different from others?

It is an actively managed multi-coin ETF, using fundamental, valuation, and momentum factors to determine which assets to hold and their weights.

Could this filing influence the crypto ETF landscape?

Yes, analysts say it could spark a “crypto land rush” with more than 200 new products entering the market over the next year.

T. Rowe Price is making its debut in the crypto space with a new actively managed ETF filing with the SEC. 

The 87-year-old asset manager filed an S-1 form with the SEC on the 22nd of October to officially launch the Active Crypto ETF.

T. Rowe Price’s ETF filing

The fund, aiming to outperform the FTSE Crypto U.S. Listed Index, will trade on the NYSE Arca under a yet-to-be-announced ticker.

According to the filing, the ETF will hold between five and fifteen digital assets. They include Bitcoin [BTC], Ethereum [ETH], Solana [SOL], Ripple [XRP], Dogecoin [DOGE], Cardano [ADA], Avalanche [AVAX], Shiba Inu [SHIB], and Litecoin [LTC], with managers selecting the final assets based on market conditions.

To comply with SEC regulations and avoid legal pitfalls that have challenged other crypto projects, managers will include only “eligible assets.”

They will also keep a portion of holdings in cash, stablecoins, or short-term safe investments, such as bank deposits, to maintain liquidity for operational expenses.

How is this ETF different from others?

According to Reuters, Bryan Armour, an ETF Analyst at Morningstar, remarked, 

“It’s a surprise to see them as a relatively late entrant, but they’re planning to offer something differentiated to try and break into the space.”

Unlike the wave of single-coin ETF filings, T. Rowe Price’s proposal stands out as a rare actively managed multi-coin fund. 

According to the prospectus and a company spokesperson, fund managers aim to outperform the FTSE Crypto U.S. Listed Index. They will use fundamental analysis, valuation metrics, and momentum factors to decide which assets to hold.

Additionally, they will determine how to weight those assets within the portfolio.

Analysts weigh in

Reacting to this momentum, Nate Geraci, President of NovaDius Wealth Management, said, 

“Can’t overstate significance of T. Rowe Price filing for an actively managed crypto ETF out of left field…T. Rowe is the quintessential legacy asset manager, founded in 1937. They manage some $1.8tril in assets, but just got involved w/ ETFs in 2020. Now moving to crypto.”

Echoing a similar sentiment, Eric Balchunas, Senior ETF Analyst at Bloomberg, added, 

“SEMI-SHOCK: T Rowe Price just filed for an Active Crypto ETF. They are a Top 5 active manager by assets (mostly mutual funds). Did not expect it but I get it. There’s gonna be land rush for this space too.”

Meanwhile, the altcoin market showed signs of potential recovery, driven by a surge in pending crypto ETP applications, led by Solana, Ripple, and Ethereum.

Seeing all this, analysts predict this could mark the beginning of a broader “crypto land rush,” with over 200 products possibly entering the market within a year.