T. Rowe Price, a traditional asset manager with nearly $1.7tn in assets under management, is pioneering the adaptation of discounted cash flow (DCF) models to digital assets. DCF is a valuation method widely used in traditional finance that estimates an asset’s worth based on its projected future cash flows discounted to present value.
The firm treats staking rewards – periodic payments users earn for locking up cryptocurrency to help secure blockchain networks such as Ethereum – as cash flow proxies. This delivers a structured framework for institutional investors evaluating Ether (ETH) and emerging tokenized products.
Speaking to Sandmark at the Consensus Miami event, David Kroger, director of digital asset research at T. Rowe Price, outlined the approach shortly after the company’s recent S-1 filing for a managed crypto exchange-traded fund (ETF). An S-1 is the regulatory registration statement required before launching a new publicly offered fund.
Valuation models mature
Kroger explained that DCF models excel at illuminating tokenomics – the economic design and incentive structures of a cryptocurrency – including token unlocks, the scheduled release of previously locked tokens to insiders or early investors, vesting schedules and protocol levers such as fee switches that allow decentralized finance (DeFi) projects to activate revenue-sharing mechanisms.
"We use them, but it’s not the only model we use," he said. "It is important that we use a bunch of models so we don’t think there is a one-size-fits-all solution."
While the frameworks perform best alongside scenario analysis and quantitative tools, limitations remain. Short historical data, inconsistent onchain signals – data recorded directly and transparently on the blockchain – and the heavy influence of momentum and narrative in crypto markets prevent simple apples-to-apples comparisons with traditional equities.
T. Rowe Price mitigates these gaps through multimodel frameworks and careful bias awareness, especially when back-testing proves difficult in a young asset class.
Institutional demand shifts
Appetite for onchain exposure now extends well beyond spot Bitcoin (BTC) and Ether ETFs. Tokenized treasuries – US government bonds issued as blockchain tokens – yield-bearing stablecoins, which are dollar-pegged assets designed to generate and distribute returns to holders and real-world assets (RWAs) – tokenized versions of traditional assets such as bonds or real estate – are gaining traction among allocators seeking greater capital efficiency and true 24/7 market access.
Kroger noted that spot Bitcoin ETFs generated stronger inflows than many expected, citing recent comments from a BlackRock executive. Multi-asset ETFs, active or passive, increasingly serve as a "one-stop shop" for fiduciaries – professionals with legal responsibility to act in clients’ best interests – wary of volatility and rebalancing demands across single-name products.
Risk and compliance teams apply heightened scrutiny. "What’s great about T. Rowe Price is you have the risk and security that the firm has established for decades now being applied to digital assets," Kroger said, highlighting in-house expertise led by head of digital assets, Blue Macellari.
Onchain data friction
A persistent friction lies in onchain data interpretation. Few professionals combine traditional financial modelling with genuine blockchain knowledge, he said. Distinguishing organic user growth from bot activity, yield farming incentives or consensus mechanics requires nuanced judgment that current AI tools cannot yet fully automate.
Kroger sees high conviction in both digital assets and artificial intelligence over the next 12 to 24 months. AI agentic bots – autonomous programs capable of executing complex tasks and transactions independently on blockchain networks – will drive onchain activity, yet separating genuine adoption from automated traffic remains essential. He recalled early Telegram trading bots that processed hundreds of millions in memecoin volume, noting security concerns that must be resolved for broader use.
Tokenization accelerates adoption
Tokenized assets are now "the talk of the town," shifting conversations toward capital efficiency and broader traditional finance participation. Kroger said he believes these innovations draw more sophisticated voices into crypto, strengthening collective thesis-testing across the sector.
Regulatory progress in the US stands out as the most important near-term catalyst. Further progress on the Digital Asset Market Clarity Act, known as the CLARITY Act – proposed legislation that seeks to provide long-awaited regulatory certainty by clearly dividing oversight between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) – could create lasting momentum for institutional adoption, he said, building sufficient institutional runway for the coming years.
