Key Takeaways
- • Ripple has established itself as a material provider of swap financing for leveraged ETFs, a traditionally bank-dominated business that generates consistent quarterly fee revenue.
- • The U.S. leveraged ETF market has grown to 593 funds managing $256 billion in assets, with 426 single-stock leveraged funds launched after regulatory approval in 2022.
- • Ripple acquired Hidden Road for $1.25 billion in 2025, rebranding it as Ripple Prime to offer prime brokerage, clearing, and financing services; the division announced a partnership with hedge fund Brevan Howard this week.
- • Regulatory constraints on bank risk-taking and fragmented relationships between startup ETF issuers and traditional financial institutions have created competitive openings for nonbank firms like Ripple, Jane Street, and Clear Street.
- • Ripple Prime's move into leveraged ETF financing represents a strategic expansion beyond crypto-native services into institutional Wall Street infrastructure.
Summary
Ripple, historically positioned as a crypto payments and infrastructure company, is leveraging its 2025 acquisition of prime brokerage Hidden Road to penetrate Wall Street's lucrative swap financing market for leveraged exchange-traded funds. The newly branded Ripple Prime is now providing prime brokerage, clearing, and financing services to institutional clients including hedge funds, marking a deliberate push into a business segment traditionally controlled by major banks. According to Noel Kimmel, president of Ripple Prime and a veteran of Cerberus Capital Management and other established Wall Street firms, the leveraged ETF financing business represents "a growing and meaningful part of our business."
The market opportunity is substantial. Leveraged ETFs have expanded dramatically, with Morningstar Direct data showing 593 such funds in the U.S. managing over $256 billion in assets. Single-stock leveraged funds alone—a category approved by regulators in 2022—comprise 426 funds and have driven significant growth. This expanded market, combined with regulatory headwinds on traditional banks, has created structural advantages for nonbank competitors. Banks continue to face stricter risk constraints on their lending and derivative exposure, while many emerging ETF issuers and startup investment managers lack the established banking relationships necessary to secure favorable swap financing terms.
Ripple's entry into swap financing through Ripple Prime positions the firm alongside other nonbank competitors such as Jane Street and Clear Street who are capturing market share by servicing new ETF providers and alternative asset managers. The division's Tuesday announcement of a prime brokerage partnership with hedge fund Brevan Howard signals Ripple's intention to expand beyond single-sector focus into broader institutional coverage. While swap financing may lack the headline appeal of major M&A or IPO transactions, it represents a stable, recurring revenue stream that has long anchored profitability for banking and securities institutions.
The market opportunity is substantial. Leveraged ETFs have expanded dramatically, with Morningstar Direct data showing 593 such funds in the U.S. managing over $256 billion in assets. Single-stock leveraged funds alone—a category approved by regulators in 2022—comprise 426 funds and have driven significant growth. This expanded market, combined with regulatory headwinds on traditional banks, has created structural advantages for nonbank competitors. Banks continue to face stricter risk constraints on their lending and derivative exposure, while many emerging ETF issuers and startup investment managers lack the established banking relationships necessary to secure favorable swap financing terms.
Ripple's entry into swap financing through Ripple Prime positions the firm alongside other nonbank competitors such as Jane Street and Clear Street who are capturing market share by servicing new ETF providers and alternative asset managers. The division's Tuesday announcement of a prime brokerage partnership with hedge fund Brevan Howard signals Ripple's intention to expand beyond single-sector focus into broader institutional coverage. While swap financing may lack the headline appeal of major M&A or IPO transactions, it represents a stable, recurring revenue stream that has long anchored profitability for banking and securities institutions.
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