T. Rowe Price digital assets

Digital assets are items of value that exist in digital form and can be owned or transferred electronically. In investing, they most often refer to cryptocurrencies and blockchain-based tokens. Their value is typically driven by supply and demand, network adoption, and real-world use.

This category includes a wide range of assets with distinct characteristics and use cases. Examples include cryptocurrencies such as Bitcoin and Ethereum, utility tokens that power decentralized applications, stablecoins designed to track fiat currencies, and digital collectibles such as NFTs.

Because each type serves a different role, risk and return drivers can vary significantly. Evaluating adoption trends, underlying technology, and network activity can help investors better understand where value may emerge within this evolving asset class.

Digital assets can transfer value, power blockchain-based applications, and enable transactions without traditional intermediaries. Common use cases include:

• Payments and money transfers: Cryptocurrencies can be sent globally, often faster and at lower cost than traditional banking systems.
• Smart contracts and applications: Blockchain networks can run automated agreements that execute when specific conditions are met, reducing the need for intermediaries.
• Digital infrastructure: Tokens can power decentralized platforms for finance, computing, and data management.

Because many digital assets operate on transparent, tamper-resistant blockchain networks, they can improve efficiency, security, and accessibility across financial and technology systems.

Digital assets, including crypto, are generally considered a high-growth, high-volatility asset class. They typically play a satellite role in a diversified portfolio rather than serving as a core holding.

From an asset allocation perspective, they are often evaluated alongside equities or other growth-oriented alternatives. Returns are largely driven by supply and demand, as well as adoption and network effects. Small allocations—often in the low single digits—can influence portfolio outcomes while helping manage overall risk exposure.

As access has expanded through vehicles such as ETPs, digital assets can now be implemented more systematically. Exposure can be sized deliberately, monitored consistently, and integrated into existing portfolio frameworks.

Cryptocurrency (crypto) is a type of digital asset that uses distributed ledger technology to enable peer-to-peer transactions without a central authority. It can be used for payments, held as an investment, or used to power decentralized applications and networks.

Transactions are recorded on distributed ledgers, where data are shared across a network of computers rather than controlled by a single institution. This structure can increase transparency, improve efficiency, and reduce reliance on intermediaries.

Different cryptocurrencies serve different roles. Some are designed primarily as stores of value, while others support applications, facilitate transactions, or provide access to digital infrastructure. Understanding these distinctions can help clarify how each may fit within a portfolio.

Cryptocurrency regulation varies by country and continues to evolve as adoption grows. Many jurisdictions are developing frameworks focused on investor protection, anti-money laundering (AML), and fraud prevention, creating a more structured environment for digital asset investing.

Requirements can differ across regions, affecting how digital assets are traded, held, and  reported. At the same time, increased regulatory clarity has supported broader institutional participation.

While the regulatory landscape remains dynamic, the overall trend points toward greater oversight and standardization—similar to other emerging technologies.

Crypto investing involves high volatility, regulatory uncertainty, and market-driven pricing. Prices are often influenced by sentiment, adoption, and liquidity rather than traditional fundamentals.

Market movements can be amplified by relatively low liquidity and rapid shifts in sentiment, leading to significant price swings. In addition, evolving regulations may introduce new risks or constraints depending on the jurisdiction.

Unlike traditional assets, many cryptocurrencies do not generate underlying cash flows, making valuation less straightforward. These factors make careful sizing, diversification, and ongoing monitoring especially important when considering an allocation.

Exchange-traded products (ETPs) are a broad category of investments that trade on exchanges. Exchange-traded funds (ETFs) are a specific type of ETP regulated under the Investment Company Act of 1940.

Both offer professional management, liquidity, and transparency. ETPs can provide exposure to assets such as commodities or cryptocurrencies, while ETFs generally hold registered securities such as stocks and bonds. Some ETPs use alternative structures—such as trusts—to hold assets that may not be permitted in an ETF.

Despite these differences, both ETPs and ETFs share common features, including intraday trading, pricing transparency, and accessibility through brokerage accounts.

Accessing crypto through an exchange-traded product (ETP) can provide a more familiar and practical approach than direct ownership. Instead of managing wallets, private keys, and crypto exchanges—which can introduce complexity and security risks—ETPs offer exposure through traditional brokerage accounts, with institutional custody and standard regulatory reporting.

The ETP structure can also provide access to professional management and, in some cases, diversified exposure across multiple tokens. This can help advisors integrate crypto more efficiently into portfolios.

While ETPs do not eliminate the risks of the asset class, they can simplify implementation and support a more disciplined portfolio construction process.