T. Rowe Price Active Crypto ETF 10-Q

Item 2. Management’s Discussion and Analy sis of Financial Condition and Results of Operations. This information should be read in conjunction with the unaudited financial statements and notes to financial statements included in Item 1 of Part I in this Form 10-Q. The following discussion may contain forward-looking statements based on current expectations that involve risks and uncertainties. The actual results could differ materially from those discussed in these forward-looking statements as a result of various factors including those set forth under “Part II. Item 1A. Risk Factors”, “Statement Regarding Forward-Looking Statements” or in other sections of this Quarterly Report on Form 10-Q. Trust Overview The T. Rowe Price Active Crypto ETF (the Trust) is organized as a Delaware statutory trust governed by the Amended and Restated Agreement and Declaration of Trust dated September 15, 2025 (Trust Agreement). The Trust is an actively-managed exchange-traded product that seeks long-term capital growth through investments in crypto assets. The trustee of the Trust is CSC Delaware Trust Company. The Trust’s sponsor is T. Rowe Price Sponsor LLC (Sponsor), a Delaware limited liability company and a direct subsidiary of T. Rowe Price Group, Inc. (Price Group). T. Rowe Price Associates, Inc. (Price Associates or Administrator), an affiliate of the Sponsor and a direct subsidiary of Price Group is the administrator of the Trust. T. Rowe Price Investment Services, Inc., a wholly owned subsidiary of the Administrator and an affiliate of the Sponsor, is the Trust's distributor (Distributor). State Street Bank and Trust Company is the Trust’s transfer agent (Transfer Agent). Anchorage Digital Bank N.A., is the custodian for the Trust’s crypto assets and payment stablecoins, and SSB is the custodian for the Trust’s cash and other assets (the Custodians). The Trust is not registered as an investment company under the Investment Company Act of 1940, as amended (the Investment Company Act) and is not required to register under the Investment Company Act. The Trust is not a commodity pool for purposes of the Commodity Exchange Act of 1936, as amended and the Sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator or a commodity trading advisor with respect to the Trust. The Trust’s investment objective is to seek long-term capital growth through investments in crypto assets. To meet the Trust’s investment objective, the Trust will employ an actively-managed investment strategy that seeks to outperform the crypto asset market, as measured by the FTSE Crypto US Listed Index (Index) by primarily investing in a diversified basket of commodity crypto assets, under normal market conditions. The Trust will invest in crypto assets through a fundamentally informed model-based process and will take an active view on specific crypto assets based on criteria such as fundamentals, valuation, and momentum, within a disciplined risk-based framework. The Trust primarily invests in crypto assets that meet the Trust’s eligibility criteria. Under normal circumstances, the Trust is expected to hold between five and fifteen (5–15) crypto assets; however, the Trust may hold more or less at any time. The Trust may also hold cash, cash equivalents, and payment stablecoins to cover expenses, buy crypto assets, and allow for efficient trading. The Trust may assume a temporary defensive position to respond to adverse market, economic, political, or other conditions, such as to provide flexibility in meeting redemptions, pay expenses, or manage cash flows. The Trust will not invest in any asset considered a security under the federal securities laws, at any time. The Trust will not utilize leverage, derivatives, or any similar arrangements in seeking to achieve its investment objective. The Trust uses the Index to measure its performance and intends to outperform the Index; the Trust does not track or replicate the Index. The Trust issues shares (shares) representing units of fractional undivided beneficial interests in, and ownership of, the Trust that are expected to trade, subject to notice of issuance, on NYSE Arca, Inc. (the Exchange) under the symbol TKNZ. The Trust issues and redeems shares on a continuous basis only in aggregations of 10,000 shares (Creation Units). Only Authorized Participants may place orders to purchase or redeem Creation Units in exchange for cash or on an in-kind basis. On June 12, 2026, the SEC issued the Trust's 19b-4 order, which among other things, permits in-kind creations and redemptions by Authorized Participants of the Trust. As a result of these regulatory actions, the Trust is authorized to create and redeem shares with Authorized Participants on an in-kind basis but does not currently utilize this approach. The Sponsor is responsible for the management of the Trust. In consideration of the Sponsor’s services related to the management of the Trust, the Trust pays an annual management fee equal to 0.90% of the Trust’s average daily net assets. The fee is computed daily and paid monthly in arrears. The management fee to the Sponsor covers all routine operational, administrative, and other ordinary expenses of the Trust, including but not limited to, fees and expenses of the Administrator, Trustee, Custodians, Transfer Agent, licensors, accounting and audit fees and expenses, tax preparation expenses, ongoing SEC registration fees, report preparation and mailing expenses, and ordinary legal fees and expenses, but does not cover brokerage commissions and other transaction costs; interest and borrowing expenses; taxes or governmental fees; and nonrecurring and extraordinary expenses. The Sponsor has contractually agreed to waive 0.15% of the Trust’s annual management fee until May 31, 2027, for a net annual management fee equal to 0.75% 9 Table of Contents of the Trust’s average daily net assets. The annual management fee waiver will automatically terminate on May 31, 2027, and may only be extended at the sole discretion of the Sponsor. Fees waived under this agreement are not subject to recoupment to the Sponsor by the Trust. As of June 30, 2026, the Trust had no operations other than matters relating to the sale and issuance of 800 seed shares (initial seed shares) of the Trust; 400 initial seed shares each to the Sponsor and Price Associates (Seed Capital Investors) at a per share price of $25 on April 1, 2026 (initial seed date). Total proceeds to the Trust from the sale of initial seed shares were $20,000. The Trust’s registration statement on Form S-1 relating to its continuous public offering of shares was declared effective by the Securities and Exchange Commission (SEC) on June 18, 2026 . On July 14, 2026, the Seed Capital Investors purchased additional seed shares (operational seed shares) in a cash transaction comprised of 599,200 shares; 5,600 operational seed shares purchased by the Sponsor and 593,600 operational seed shares purchased by Price Associates at a per share price of $25. Total proceeds from the sale of the operational seed shares were $14,980,000. The Trust commenced operations and shares commenced trading on the Exchange on July 16, 2026. Valuation of Crypto Assets and Calculation of Net Asset Value (NAV) The NAV of the Trust will be equal to the total assets of the Trust, including but not limited to, all crypto assets, payment stablecoins, cash, and cash equivalents less total liabilities of the Trust. The NAV per share is calculated by dividing NAV of the Trust by the number of shares currently outstanding. The Sponsor has the authority to determine the Trust’s NAV. Subject to oversight of the Sponsor, the Sponsor has delegated to the Administrator the responsibility to calculate the NAV of the Trust as well as the daily valuation process, based on pricing sources selected by the Sponsor. The Administrator calculates the Trust’s NAV per share once each business day, at the close of the New York Stock Exchange (NYSE), normally 4:00 p.m. E.T. each day the NYSE is open for business. However, the NAV per share may be calculated at a time other than the normal close of the NYSE if trading on the NYSE is restricted, if the NYSE closes earlier, or as may be permitted by the SEC. For purposes of making these calculations, a business day means any day other than a day when NYSE is closed for regular trading (business day). In determining the Trust’s NAV, the Administrator values each crypto asset and payment stablecoin held by the Trust based on a reference rate. The Administrator has engaged Lukka, Inc., a third-party vendor, to provide a reference rate for each crypto asset held by the Trust. The Lukka Digital Asset Median Reference Rate - U.S. Dollar for each crypto asset is the primary reference rate used to value the Trust’s crypto asset holdings, unless the Administrator determines that one or more reference rates is not available or is unreliable (each a “reference rate”). Each reference rate aggregates the trade flow of the respective crypto asset on spot exchange platforms, during an observation window between 3:00 p.m. and 4:00 p.m. E.T. into the U.S. dollar price of the respective crypto asset, at 4:00 p.m. E.T. If one or more reference rates from the primary vendor are not available or the Administrator determines that one or more reference rates are unreliable, then reference rates from another source may be used. Alternately, the Trust’s crypto asset holdings may be fair valued by the Administrator. The reference rate used in determining value of each crypto asset may not be deemed to be consistent with GAAP. The Trust’s periodic financial statements are prepared in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements” (ASC Topic 820). ASC Topic 820 requires the fair value measurement of each crypto asset to assume that the transactions take place in the principal market or, in the absence of a principal market, the most advantageous market, for each crypto asset, that the Trust has access to. The Sponsor determines in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP. The Administrator has engaged Lukka Inc. to obtain exchange-traded price for each crypto asset from its respective principal market which is determined based on its consideration of several exchange characteristics, including volume and frequency of trades. The exchange-traded price from the principal market for each crypto asset on the Trust’s periodic financial statements is as of 11:59 p.m. E.T. on the Trust’s financial statement measurement date. NAV per share as of the period-end reporting date in the financial statements may differ from NAV per share for shareholder transactions as a result of the adjustments made in accordance with GAAP. 10 Table of Contents Liquidity The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs. The Trust may hold cash, cash equivalents, and payment stablecoins to cover expenses, buy crypto assets, and allow for efficient trading. The Trust may assume a temporary defensive position by holding a greater portion of its assets in cash, cash equivalents, and payment stablecoins to respond to adverse market, economic, political, or other conditions, such as to provide flexibility in meeting redemptions, paying expenses, or managing cash flows. However, the Trust generally holds only a small cash balance to facilitate creation and redemption cash orders and is otherwise fully invested in order to maintain its investment objective. The Trust’s only ordinary recurring expense is the Sponsor’s management fee. The Sponsor pays all routine operational, administrative, and other ordinary expenses of the Trust, including but not limited to, fees and expenses of the Administrator, Trustee, Custodians, Transfer Agent, licensors, accounting and audit fees and expenses, tax preparation expenses, ongoing SEC registration fees, report preparation and mailing expenses, and ordinary legal fees and expenses. The Trust’s source of liquidity is its sales of crypto assets and cash and cash equivalents balances. Off-Balance Sheet Arrangements At June 30, 2026, the Trust did not have any off-balance sheet arrangements. Critical Accounting Policies and Estimates The Trust’s financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. The Trust qualifies as an investment company solely for accounting purposes and follows the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 (ASC 946). The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations. These estimates and assumptions affect the Trust’s application of accounting policies. A description of the valuation of crypto assets, a critical accounting policy that the Trust believes is important to understanding its results of operations and financial position, is provided in the section titled “Valuation of Crypto Assets and Calculation of Net Asset Value (NAV)”, above. In addition, refer to Note 2 to the financial statements included in this report for further discussion of the Trust’s accounting policies and Note 3 to the financial statements included in this report for further discussion on fair value determination of crypto assets. Results of Operations The period from April 1, 2026 (initial seed date) through June 30, 2026* As of June 30, 2026, the Trust had no operations other than matters relating to the sale and issuance of 800 initial seed shares; 400 initial seed shares each to the Sponsor and Price Associates at a per share price of $25 on April 1, 2026. As the Trust had not commenced operations, no management fee was charged by the Sponsor during the three-month period ended June 30, 2026. * No comparative period presented as the Trust had not commenced operations on June 30, 2026. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable.