Capital · United States

Ripple is earning fees financing leveraged stock bets, a business long run by banks

Credited to CoinDesk · coindesk.com · 21h ago

Photograph · CoinDesk

The crypto company's $1.25 billion acquisition of Hidden Road has opened a corner of Wall Street where funds pay to amplify daily moves in stocks such as Nvidia and Sandisk.

Ripple is expanding into the business of financing leveraged stock exchange-traded funds, putting the crypto company in a market long dominated by major banks and securities firms.

Its prime brokerage division, Ripple Prime, is supplying financing for funds that let investors multiply the daily moves of individual stocks and market indexes, according to a Wall Street Journal report Wednesday.

Ripple entered the business through its $1.25 billion acquisition of Hidden Road, a multi-asset prime brokerage firm, in October 2025. The deal gave Ripple an established operation that clears trades, finances investment positions and handles transactions across stocks, bonds, currencies and digital assets.

A fund promising twice the daily return of Nvidia can enter into a financial contract called a total return swap rather than buying twice its assets in Nvidia shares. A broker provides the exposure, typically hedging its own risk through stock purchases or other trades, while collecting a financing fee from the fund.

The Journal reported that the Tradr 2X Long SNDK Daily ETF, which targets twice the daily movement of memory-chip maker Sandisk, pays Ripple the overnight bank funding rate — a benchmark for what banks pay to borrow overnight — plus four percentage points.

That puts the annualized financing rate at roughly 8% at prevailing rates, charged on the swap exposure and separate from the ETF's management fee.

The U.S. market now has 593 leveraged ETFs holding more than $256 billion, including 426 funds tracking individual stocks, according to Morningstar Direct data.

Banks have traditionally supplied much of this financing, but tighter capital and risk requirements have created openings for nonbank firms including Ripple Prime, Jane Street and Clear Street.

Ripple launched its Delta One business in August, offering total return swaps tied to U.S. stocks, market indexes and digital assets. It said at the time the operation had more than $1 billion in regulatory net capital, and it had completed a $275 million senior debt offering to help finance further growth.

Meanwhile, the company announced an expanded agreement on Tuesday with hedge fund manager Brevan Howard, under which Ripple Prime will provide brokerage, clearing and financing services across multiple asset classes.

Leveraged ETFs reset their exposure daily, and sharp moves in individual stocks can leave financing firms exposed if a fund's assets are insufficient to cover losses.

The business gives Ripple fee income tied to stock trading and institutional financing. As such, the company has still not disclosed how much revenue its leveraged ETF financing generates or how much of that activity uses XRP or the XRP Ledger.

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CapitalUnited States

Advantech tops US$1 billion in third-quarter revenue as edge AI orders climb

Credited to DigiTimes$ · digitimes.com2h ago

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