Ripple is earning fees financing leveraged stock bets, a business long run by banks
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Summary
Ripple has expanded into financing leveraged stock exchange-traded funds (ETFs) through its prime brokerage division, Ripple Prime. This move follows its $1.25 billion acquisition of the multi-asset prime brokerage firm Hidden Road in October 2025. Ripple Prime provides total return swaps that let funds gain amplified exposure to stocks and indexes, a market traditionally dominated by major banks.
Why it matters
This development matters because it offers Ripple a new source of fee income in the fast-growing leveraged ETF market. However, the business carries risks as sharp stock market moves can leave financing firms exposed to losses. The source does not explicitly elaborate further on the broader impact for markets, users, or policy.
Key context
Ripple’s entry into leveraged ETF financing was enabled by the acquisition of Hidden Road, which handles trade clearing, financing, and transactions across multiple asset types. Leveraged ETFs use total return swaps with financing firms to gain exposure without directly purchasing double the underlying shares. Traditionally, banks provided this financing, but tighter capital requirements have allowed firms like Ripple Prime to enter the space.
Key numbers and entities
Ripple acquired Hidden Road for $1.25 billion in October 2025. The U.S. leveraged ETF market includes 593 funds with $256 billion in assets, of which 426 track individual stocks. Ripple Prime charges financing fees around 8% annualized on swap exposure, exemplified by the Tradr 2X Long SNDK Daily ETF deal. Ripple’s Delta One business has over $1 billion in regulatory net capital and completed a $275 million senior debt offering. The company recently expanded an agreement with hedge fund Brevan Howard for brokerage, clearing, and financing services.
What remains unclear
The source does not disclose how much revenue Ripple generates specifically from leveraged ETF financing or what proportion of this activity involves XRP or the XRP Ledger. Details on risk management practices and potential regulatory implications are also not provided.