Ripple (XRP) Enters Wall Street Leveraged ETF Financing Market... Expanding Business Through 'Ripple Prime'

Ripple, the issuer of the cryptocurrency XRP, has entered the leveraged exchange-traded fund (ETF) financing market, which is considered a major revenue source on Wall Street. The company is expanding its business into the swap financing services sector, which has traditionally been led by banks and securities firms.

■ Expanding Fee-Based Business Through Swap Financing

According to overseas crypto media outlet CoinGeek on the 8th (local time), Ripple is expanding its business of providing funding to leveraged ETF managers and collecting fees through Ripple Prime, its institutional brokerage division. The Wall Street Journal (WSJ) reported that day that Ripple is making moves to target the leveraged ETF financing market and position itself as a major Wall Street competitor.

Swap financing is not a business that attracts public attention like large-scale corporate acquisitions or initial public offerings (IPOs), but it is regarded as one of the highly profitable sectors on Wall Street. CoinGeek reported that Ripple is broadening its reach beyond cross-border payments, stablecoins, and asset custody services into foundational businesses of the institutional financial market.

■ Roughly 8% Annualized Financing Fee... Earning Revenue Daily Through Swap Spreads

According to CoinGeek, Ripple Prime supplies funding to equity leveraged ETFs and receives financing fees. Notably, the 'Tradr 2X Long SNDK Daily ETF' carries a financing fee rate of approximately 8% on an annualized basis. Ripple earns revenue from such products daily through swap spreads. However, these products have the characteristic of structurally underperforming their underlying benchmark returns when held for more than a day.

Data from market research firm Morningstar Direct shows that there are currently 593 leveraged ETFs in the U.S. market, with total assets exceeding $256 billion. Of these, 426 track individual stocks.

■ Foundation Built Through Hidden Road Acquisition... Plans to Expand Client Base to Hedge Funds

CoinGeek explained that Ripple provides these services through Ripple Prime, which it built after acquiring Hidden Road for $1.25 billion in 2025 (local time). Ripple Prime currently works with multiple ETF managers and has stated plans to offer similar services to other asset managers, including hedge funds.

Banks have traditionally served as the main funding providers in the leveraged ETF financing market. However, strengthened capital and risk management requirements have opened opportunities for non-bank financial firms to enter the market. According to CoinGeek, firms including Ripple Prime, Jane Street, and Clear Street are seizing business opportunities amid these market changes.

■ Delta One Business and Expanded Partnership with Brevan Howard

Previously, CoinGeek reported that Ripple Prime launched a Delta One business targeting institutional investors, enabling it to support total return swap (TRS) transactions based on U.S. stocks, stock indices, and crypto assets. The news drew attention from the XRP community as it shows Ripple expanding its business into the stock market.

Leveraged ETFs are products designed to typically track the daily returns of a specific stock or index at two or three times the rate. Fund managers utilize derivatives similar to total return swaps to implement this return structure.

According to CoinGeek, Ripple Prime also expanded its partnership with global investment management firm Brevan Howard earlier this week (local time). Under the expanded partnership, Ripple Prime will provide prime brokerage, clearing, and financing services across multiple asset classes to Brevan Howard funds.

■ 'A Rapidly Growing ETF Market'... Rising Demand for Swap Counterparties

CoinGeek reported that as leveraged ETFs and ETFs concentrated in a small number of holdings grow rapidly, new financial firms offering swap transactions are entering the market. These products rely on swap contracts to implement their return structures, making the role of counterparties crucial.

Nate Geraci, host of ETF Prime, described the market as 'a highly profitable business for those equipped with systems to appropriately manage the operational and related risks.' He predicted that more alternative swap counterparties will emerge as traditional financial firms reach the limits of their funding capacity. Geraci added, 'It means this segment of the ETF market is growing that quickly.'

CoinGeek explained that financial firms also rely heavily on institutional crypto custody solutions to handle large-scale swap contracts stably. These solutions play a role in safely storing digital assets in accordance with strict regulatory compliance requirements.

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