The U.S. leveraged ETF sector includes 593 funds with more than $256 billion in combined assets, including exchange-traded products linked to XRP. Ripple Prime is entering this competitive market by offering total-return swap financing to investment managers. The move places the crypto-focused company in a financial segment historically controlled by major banks and tests its ability to compete in a business that requires substantial capital and sophisticated risk management.
The expansion follows Ripple’s $1.25 billion acquisition of Hidden Road, completed in 2025, which was subsequently rebranded as Ripple Prime. Through this business, Ripple is extending its reach into traditional financial markets, where swap financing can provide a steady stream of fees but also exposes providers to potential losses when underlying assets experience sharp price movements.
Ripple announced the Hidden Road acquisition in April 2025, describing the firm as a multi-asset platform specializing in brokerage, clearing, and financing. Following the transaction’s completion, the business adopted the Ripple Prime name as part of the company’s broader institutional expansion.
Ripple Prime’s latest move includes providing brokerage, clearing, and financing services to hedge fund Brevan Howard. The relationship, announced on October 6, highlights Ripple’s efforts to strengthen its position among established institutional investors.
Leveraged ETF Financing Offers Revenue but Carries Risks
Leveraged exchange-traded funds use derivatives such as total-return swaps to amplify the daily performance of individual stocks or market indexes. Financial institutions provide the necessary financing in exchange for fees and typically hedge their exposure by purchasing the underlying assets.
Morningstar Direct figures cited by The Wall Street Journal indicate that the U.S. market has 593 leveraged ETFs holding more than $256 billion in assets. Single-stock leveraged products account for 426 of those funds, a category that regulators first authorized in 2022.
The financing arrangements can generate substantial revenue. For example, the Tradr 2X Long SDNK Daily ETF pays Ripple a financing rate based on the overnight bank funding rate plus four percentage points. As of October 7, the arrangement represented an annualized financing cost of approximately 8% of the fund’s assets.
These charges are added to management expenses and affect the fund’s net asset value. Over time, financing costs can accumulate alongside daily resets and movements in the underlying asset, making leveraged ETFs more expensive to hold over extended periods than a straightforward multiple of an asset’s long-term return might suggest.
However, the business also exposes financing providers to counterparty risk. A sharp single-day decline in an underlying stock can potentially wipe out a leveraged ETF’s equity, leaving its financing provider vulnerable to losses. To manage this exposure, providers generally hedge their positions through other asset managers or market makers.
Large banks have traditionally dominated leveraged ETF financing, but tighter restrictions on their risk exposure have created opportunities for nonbank competitors. Jane Street and Clear Street are among the firms identified as gaining ground in this market.
Can Ripple Prime’s Expansion Drive Demand for XRP?
Ripple Prime is working to attract more institutional clients, including hedge funds, as it expands its traditional financial services operations. Its agreement to provide brokerage, clearing, and financing services to Brevan Howard illustrates how the company is pursuing relationships with major investment managers.
Since Ripple acquired Hidden Road, the business has also expanded its institutional cryptocurrency services in the United States, including over-the-counter swaps, cross-margining, and financing. These activities demonstrate that Ripple’s ambitions extend beyond payments and cryptocurrency trading into a broader multi-asset brokerage business.
The company has also developed institutional relationships in other areas, including custody and tokenization. Its work involving South Korea’s Meritz Securities is one example of these broader initiatives. However, such partnerships do not establish that XRP is being used to finance or collateralize the leveraged ETF swaps offered by Ripple Prime.
For XRP, the expansion is better viewed as a potential long-term development for Ripple’s institutional business than as an immediate catalyst for a price rally. The benefits to the token will depend on whether these activities create additional XRP demand, expand its practical utility, or encourage new market participation.
Investors should continue monitoring XRP trading volume, overall sentiment, and price movements around important resistance levels before interpreting Ripple Prime’s growth as a bullish signal. XRP was trading near $1.41, with little immediate indication that the leveraged ETF financing announcement had generated a positive market response.
