NEW YORK – Ripple, the payments company behind XRP, is now financing leveraged stock exchange-traded funds, moving into a fee business major banks have controlled for decades. Its prime brokerage unit, Ripple Prime, provides funding contracts for funds that multiply the daily moves of individual stocks and market indexes, according to a Wall Street Journal report published on Wednesday.
The entry came through Ripple’s $1.25 billion acquisition of Hidden Road, a multi-asset prime brokerage firm, completed in October 2025. The deal gave the company an established operation that clears trades, finances investment positions and handles settlement across stocks, bonds, currencies and digital assets. A year later, that plumbing is running a slice of America’s fastest-growing fund category, and collecting bank-style financing spread while doing it.
How the trade works
A fund promising twice the daily return of Nvidia does not need to buy twice the shares. It signs a total return swap, a contract in which a broker provides the exposure, hedges its own risk through stock purchases or other trades, and collects a financing fee from the fund. The fund keeps charging its management fee. The broker earns a spread on the money it effectively lends.
For single-stock funds the broker usually holds the underlying shares as a hedge, which means the financing desk also influences real market demand for the stocks involved. When Nvidia swings 4 percent in a session, the hedging flows behind hundreds of thousands of leveraged positions move with it. Desks rebalance at the close, which is one reason leveraged ETF hedging has become a visible part of end-of-day volume in the most popular underlying stocks.
The Journal found one concrete number in the fund documents. The Tradr 2X Long SNDK Daily ETF, which targets two times the daily movement of memory chip maker Sandisk, pays Ripple the overnight bank funding rate plus four percentage points. With overnight benchmark rates close to 4 percent, that works out to roughly 8 percent annualized on the swap exposure, charged on top of the fund’s own management fee. That is close to what a prime broker would have charged a hedge fund a decade ago, and it is now being earned by a company whose main product is a cross-border payments token.
A market built on multipliers
The addressable market is large. US leveraged ETFs now number 593 funds holding more than $256 billion in assets, including 426 funds tied to individual stocks, according to Morningstar Direct data. The category barely existed in its single-stock form three years ago. Issuers launched them in volume during the 2024 and 2025 rally, when retail demand for amplified exposure to Nvidia, Tesla and meme stocks ran hot, and the product count has kept growing even as the tape turned cold this autumn. Financing demand follows the product count, not the price of bitcoin.
Banks supplied most of this financing for years. But post-2008 capital and risk rules made balance-sheet-heavy derivatives businesses less attractive, and the gap opened for nonbank firms. Ripple Prime competes there with Jane Street and Clear Street, two of the more aggressive independent market makers and financing shops of the past five years. None of the three is a bank, yet all three now perform functions that defined bank capital markets desks.
Crypto money on Wall Street terms
Ripple built the unit in stages. In August it launched its Delta One desk, offering total return swaps tied to US stocks, market indexes and digital assets, and said the operation held more than $1 billion in regulatory net capital. It also completed a $275 million senior debt offering to fund further growth. On Tuesday the company announced an expanded agreement with hedging clients, deepening the same book of business.
The strategy is familiar to anyone who watched Ripple buy Hidden Road. Rather than chasing retail payment volume, the company is collecting financing spread from professional funds, which so far has been the most stable revenue in crypto-adjacent finance. Coinbase has pushed in the same direction with derivatives clearing, and Circle has built out a payments and collateral network. The pattern suggests crypto firms are buying their way into regulated finance instead of waiting for token adoption to arrive on its own.
The risks are real. A financing desk eats losses when stocks gap through its hedge, so the risk book matters more than the fee schedule. Leveraged ETFs reset daily and their hedging turnover concentrates at the close, which stresses funding desks on high-volatility days. Ripple has not disclosed how much swap notional it carries in single-stock ETFs, and it declined to name counterparties beyond the Sandisk example.
For XRP holders the connection is indirect. Fee income accrues to Ripple the company, not the token, and the firm remains private. Its $1.42 price on Wednesday, down nearly 3 percent on the day, moved with the wider market rather than the WSJ story. Still, the report widens the argument that a crypto company can become a serious Wall Street counterparty. The WSJ noted Ripple sees the desk as a bridge between digital asset markets and traditional collateral markets, a claim that will be tested the first time a volatile stock forces the desk to reprice risk in the middle of an episode.