Ripple Expands Into Wall Street's Leveraged Stock Financing

Ripple has pushed deeper into traditional financial markets by supplying financing for leveraged stock exchange-traded funds. Through its prime brokerage division, Ripple Prime, the crypto company is competing in a lucrative space traditionally controlled by major global banks and securities firms.

The strategic expansion follows Ripple's $1.25 billion acquisition of Hidden Road in October 2025. That transaction provided the firm with an established multi-asset prime brokerage operation capable of clearing trades, financing investment positions, and managing transactions across conventional and digital assets.

Total Return Swaps and Leveraged ETFs

Rather than purchasing underlying shares directly, specialized funds seeking to amplify daily market moves often utilize financial contracts known as total return swaps. A prime broker supplies this exposure while collecting regular financing fees from the fund, typically hedging its own risk through secondary market trades.

For instance, 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 plus four percentage points. At prevailing rates, this establishes an annualized financing fee of roughly 8% on the swap exposure, independent of the fund's standard management fee.

The broader market for these products has grown significantly. The United States currently features 593 leveraged ETFs holding over $256 billion in assets, a universe that includes 426 funds tracking individual equities.

Changing Wall Street Dynamics

Why it matters

Traditional banks have historically dominated this form of institutional lending. However, stringent capital requirements and evolving risk rules have created opportunities for nonbank firms such as Ripple Prime, Jane Street, and Clear Street to capture market share.

Ripple formalized its entry into this segment by launching its Delta One business in August, offering total return swaps tied to equities, market indexes, and digital assets. At the time, the division reported over $1 billion in regulatory net capital, bolstered by a $275 million senior debt offering designed to fund ongoing growth. The company also recently expanded its partnership with hedge fund manager Brevan Howard to provide comprehensive brokerage and financing services.

Despite these operational milestones, Ripple has not yet disclosed specific revenue figures for its leveraged ETF financing activities. It remains unclear what proportion of these transactions actively utilizes XRP or the XRP Ledger.

What to watch

Observers will monitor whether regulatory scrutiny shifts toward nonbank entities operating in traditional derivatives and swap markets. Additionally, market participants will track how effectively firms like Ripple manage counterparty risks, given that leveraged ETFs reset their exposure daily and remain vulnerable to sharp single-stock volatility.