T. Rowe Price, one of the largest asset management companies in the United States, has applied to the Securities and Exchange Commission (SEC) to launch an exchange-traded fund (ETF) focused on cryptocurrencies.
The proposed fund, named the T. Rowe Price Active Cryptocurrency ETF, aims to outperform the FTSE U.S.-listed Cryptocurrency Index, which tracks the top 10 U.S.-listed cryptocurrencies by market capitalization that meet SEC listing criteria.
Unlike passive funds, ETFs can overvalue or undervalue assets relative to an index and can invest in cryptocurrencies that are not included in the index, but all holdings must meet eligibility criteria, according to SEC filings.
The application came as a surprise to market participants. Eric Balciunas, senior ETF analyst at Bloomberg, called this a “semi-shocking” move, noting that T. Rowe Price, a top-five active manager primarily known for traditional mutual funds, is entering the nascent but increasingly crowded crypto ETF space.
“There will be a land rush for this space,” he tweeted.
Shares are traded on the NYSE Arca. Investors can buy and sell shares like stocks, but they still come with the usual crypto risks.
Dominic Rizzo, who manages some of T. Rowe Price’s ETFs, has emphasized his beliefs and long-term beliefs in cryptocurrencies, decentralized finance (DeFi), and stablecoins in the past.
“Longer term, I think there will be a lot of applications that take advantage of these technologies,” Rizzo said regarding cryptocurrencies.
Virtual currency ETF and Bitcoin ETF
Exchange-traded funds have become a popular way for traditional investors to gain exposure to cryptocurrencies without directly owning the assets. Bitcoin ETFs offer investors a regulated and accessible way to gain exposure to Bitcoin.
ProShares Bitcoin Strategy ETF (BITO), the first Bitcoin-linked ETF in the United States, was launched on October 19, 2021, tracking Bitcoin futures contracts. However, it was not until January 10, 2024 that the US SEC approved the first spot Bitcoin ETF, allowing funds to hold Bitcoin directly.
The largest Bitcoin ETF by assets under management is iShares Bitcoin Trust (IBIT), managed by BlackRock. IBIT holds over $100 billion in assets, representing over 3% of the total Bitcoin supply.
Other notable spot Bitcoin ETFs include Fidelity’s Wise Origin Bitcoin Fund (FBTC) and ARK 21 Shares Bitcoin ETF (ARKB), each with billions of dollars in assets under management.
Bitcoin whales are increasingly using ETFs, moving their holdings out of cold storage and into U.S. spot Bitcoin ETFs using tax-neutral “spot” trading that converts Bitcoin into fund shares without selling.
This transition will integrate Bitcoin into traditional finance, making it easier to borrow, use as collateral, and incorporate into estate plans, with companies like BlackRock already processing billions of dollars in such transfers.
Source: https://bitcoinmagazine.com/business/t-rowe-price-joins-crypto-etf-race-with-sec-filing-for-active-fund
