Ripple Prime is now financing leveraged stock exchange-traded funds, a business long run by major banks, through total return swaps that pay the firm a financing fee. The move follows Ripple's $1.25 billion acquisition of Hidden Road and lands in a leveraged-ETF market that has grown past $256 billion in assets.
Ripple Prime, the crypto company's prime brokerage division, is financing funds that let investors multiply the daily moves of individual stocks and market indexes. The business was long dominated by major banks and securities firms, according to a Wall Street Journal report published Wednesday.
A Bank-Sized Business, Built on an Acquisition
The company entered the business through its $1.25 billion acquisition of Hidden Road in October 2025, a multi-asset prime brokerage firm. The deal gave Ripple an operation that clears trades, finances positions and handles transactions across stocks, bonds, currencies and digital assets. Separately, the Wall Street Journal now describes Ripple as a major competitor to banks, citing its broader reach across stablecoins, custody, cross-border payments and prime brokerage.
How the Financing Works
A fund promising twice the daily return of Nvidia can enter a total return swap instead of buying twice its assets in Nvidia shares. A broker supplies the exposure, typically hedging its own risk through stock trades, and collects a financing fee from the fund. The Tradr 2X Long SNDK Daily ETF, which tracks twice the daily move of Sandisk, pays Ripple the overnight bank funding rate plus four percentage points — an annualized rate of roughly 8% at prevailing levels.
Room to Grow, but Risk Attached
The U.S. market now holds 593 leveraged ETFs with more than $256 billion in assets, including 426 funds tracking individual stocks, according to Morningstar Direct data. Banks traditionally supplied most of that financing, but tighter capital and risk rules have opened the door to nonbank firms such as Ripple Prime, Jane Street and Clear Street.
Ripple launched its Delta One business in August, offering total return swaps tied to U.S. stocks, indexes and digital assets, saying at the time it held more than $1 billion in regulatory net capital after completing a $275 million senior debt offering. On Tuesday, the company also announced an expanded agreement with Brevan Howard, under which Ripple Prime will provide brokerage, clearing and financing across multiple asset classes.
Leveraged ETFs reset their exposure daily, and sharp stock moves can leave financing firms exposed if a fund's assets fall short of covering losses. Ripple has not disclosed how much revenue its leveraged-ETF financing generates or how much of that activity runs through XRP or the XRP Ledger.
Sources: CoinDesk, Coinpedia (snippet-based)
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