Ripple Prime, the institutional brokerage arm that emerged from Ripple's $1.25 billion acquisition of Hidden Road in October 2025, is now earning fees financing leveraged stock bets — a business long run by Wall Street banks. The unit supplies total return swaps to leveraged ETF issuers, charging...
"It's definitely a growing and meaningful part of our business." — Noel Kimmel, President of Ripple Prime
Ripple Prime, the institutional brokerage arm that emerged from Ripple's $1.25 billion acquisition of Hidden Road in October 2025, is now earning fees financing leveraged stock bets — a business long run by Wall Street banks. The unit supplies total return swaps to leveraged ETF issuers, charging the overnight bank funding rate plus 400 basis points on swap exposure, or roughly 8% annualized at prevailing rates.
The move places Ripple inside a $256 billion U.S. leveraged ETF market that currently hosts 593 products, 426 of which track individual stocks. It represents the clearest signal yet that a crypto-native firm is competing for traditional bank revenue streams, not adjacent to them.
Ripple Prime clears more than $3 trillion annually, serves over 300 institutional clients, holds more than $1 billion in regulatory net capital, and carries a BBB investment-grade issuer rating from Kroll Bond Rating Agency. On October 6, the firm announced an expanded partnership with Brevan Howard, a $35 billion alternative investment manager. Two days later, CoinDesk and The Wall Street Journal reported the leveraged ETF financing operation.
Ripple Prime launched its Delta One business in August 2026, offering total return swaps tied to U.S. stocks, market indexes, and digital assets. The leveraged ETF financing operation is a subset of this desk.
Concrete example: the Tradr 2X Long SNDK Daily ETF pays Ripple Prime the overnight bank funding rate plus 4 percentage points. That financing cost is annualized at approximately 8% at current rates and is charged on the swap exposure, separate from the ETF's management fee.
The structure works as follows: a fund promising twice the daily return of an underlying asset enters into a total return swap with Ripple Prime rather than purchasing twice its net asset value in the underlying security. Ripple Prime provides the leveraged exposure and hedges its own risk through stock purchases or other offsetting trades, collecting the financing fee for bearing the counterparty and operational risk.
Total return swaps are the standard mechanism for delivering leveraged exposure in ETF wrappers. The swap counterparty — historically a bank — receives a fixed financing rate and provides the fund with the total return (price appreciation plus dividends) of a reference asset or index.
The counterparty's economics are straightforward: collect the financing spread, manage the hedge book, and absorb counterparty credit risk. Margins are thin per transaction but scale with notional exposure. At 8% annualized on a $256 billion market, the aggregate fee pool runs into the tens of billions of dollars annually.
For the ETF issuer, using a swap is operationally simpler and more capital-efficient than maintaining 2x or 3x margin positions in the underlying securities. For the counterparty, it is a steady-state fee business that compounds with AUM growth in the leveraged ETF segment.
The U.S. leveraged ETF segment has expanded rapidly. According to Morningstar Direct data, 593 leveraged ETFs now operate in the United States, overseeing assets exceeding $256 billion. Of these, 426 are single-stock funds.
By mid-August 2026, 244 new leveraged ETFs had launched in the U.S., already surpassing the 229 introduced during all of 2025, according to Benzinga reporting. However, the market is also experiencing consolidation: 63 leveraged single-stock ETFs closed in 2026, up from only three in 2025. The average leveraged ETF has shrunk from $272.2 million in assets at end-2024 to $63.3 million, indicating significant dispersion between winners and losers.
Concentration is high. Since 2022, the share of bullish leveraged ETF exposure tied to AI-related companies has climbed from 26% to 58%, according to Bloomberg data. The GraniteShares 2x Long NVDA Daily ETF alone holds approximately $3.9 billion in assets. Trading volume in leveraged ETFs tripled from its January 2026 low to its June peak, with 30-day volume reaching approximately $70 billion.
Banks have traditionally dominated swap financing for leveraged ETFs. Post-2008 capital rules — Basel III and its successors — increased the cost of holding swap exposure on bank balance sheets. Each total return swap consumes regulatory capital under the standardized approach for counterparty credit risk.
The result: banks remain active but are selective about which swap relationships they maintain, creating openings for nonbank firms. Tighter capital and risk requirements have created space for entrants including Ripple Prime, Jane Street, and Clear Street, according to CoinDesk reporting.
This is not unique to leveraged ETFs. Across fixed income, equities, and derivatives, nonbank trading firms have gained share steadily. According to a 2025 BCG report, Jane Street-led nonbank rivals are projected to capture 30% of global trading market share by the end of the decade, up from approximately 20% currently.
Ripple Prime's balance sheet reflects deliberate institutional positioning:
Revenue has tripled year over year since the acquisition. Client collateral has doubled, and average daily transactions exceed 60 million, according to company disclosures.
Ripple Prime's entry into leveraged ETF financing sits within a broader structural shift in capital markets. The global prime brokerage market was valued at $55.3 billion in 2025 and is projected to reach $92.8 billion by 2034 at a 6.2% CAGR, according to market research firm MarketIntelo.
The nonbank segment is growing faster than the overall market. Jane Street reported first-quarter 2026 revenues of $16 billion, up 122% year over year. The firm more than doubled that in Q2 2026, with media reporting $40 billion in revenues year to date. Citadel Securities, Jane Street, and Hudson River collectively generated approximately $27 billion in trading revenue in Q1 2026 alone, according to Hedgeweek.
Ripple Prime's competitive position differs from these trading-centric firms. Its revenue model centers on clearing, intermediation, and repo activities focused on short-duration U.S. government securities — closer to a traditional prime broker than a proprietary trading firm. The Delta One desk and leveraged ETF financing represent incremental revenue lines layered onto this clearing-centric base.
The Brevan Howard partnership, announced October 6, underscores the client profile Ripple Prime is targeting: large alternative asset managers seeking a single platform for traditional and digital asset prime brokerage, clearing, and financing. Brevan Howard manages approximately $35 billion in assets.
The significance of Ripple Prime's move extends beyond the specific revenue opportunity. A crypto-native company — one that settled a multi-year SEC enforcement action and whose core product is a cross-border payment token — is now financing leveraged equity bets on NVIDIA and SanDisk alongside Goldman Sachs and Morgan Stanley.
This is not a tokenization play, a stablecoin integration, or a blockchain infrastructure sale. It is a direct entry into a traditional bank revenue stream, funded by a mix of crypto-derived capital and conventional debt markets, and rated by a mainstream credit agency.
Ripple CEO Brad Garlinghouse has framed the broader strategy explicitly: "XRP is the North Star for Ripple. When we think about what we're doing on Ripple Payments, Ripple Prime, or Ripple Treasury, or custody, or RLUSD, this is all focused on how we can drive utility, trust, and velocity, or liquidity, around XRP and the XRP ledger."
The leveraged ETF business, however, has no visible XRP component. The fees are earned in dollars. The swaps reference U.S. equities. The counterparty risk is managed through conventional hedging. The connection to crypto is the ownership structure — Ripple Labs — and the capital that funded the acquisition.
This raises a question the market has not yet priced: whether Ripple Prime's growth as a traditional financial intermediary creates a valuation floor for Ripple Labs that is independent of XRP's token price. XRP declined over 5% to $1.40 in the 24 hours following the announcement, suggesting the market does not yet see a direct transmission mechanism.
Ripple Prime's entry into leveraged ETF swap financing marks a structural milestone in crypto-TradFi convergence. The transaction is not about putting stocks on a blockchain or tokenizing ETF shares. It is about a crypto-funded company acquiring and scaling a traditional financial intermediary until it competes directly with banks for the same fee pools.
The economics are clear: at 8% annualized on leveraged exposure in a $256 billion and growing market, the revenue opportunity is material. The competitive dynamics are equally clear: post-Basel capital constraints make banks less aggressive counterparties, and well-capitalized nonbank entrants are filling the gap.
Whether Ripple Prime can sustain growth against incumbents with deeper client relationships and broader product suites remains to be demonstrated. The BBB rating, the Brevan Howard mandate, and the $3 trillion clearing volume suggest it has crossed the credibility threshold. The next test is profitability at scale in a business where margins compress as competition intensifies.