Oct 8, 2026, 2:17 a.m. EDT
2 min read
Summary
- Ripple Prime is financing leveraged equity exchange-traded funds, stepping into a sector historically controlled by major financial institutions and commercial banks.
- Ripple entered this arena via its $1.25 billion purchase of Hidden Road and currently delivers total return swaps that grant funds enhanced exposure to equities and market indices.
- The rapid expansion of the leveraged ETF sector supplies Ripple with an alternate revenue stream from fees, though it introduces risks since abrupt stock fluctuations can render financing providers vulnerable to potential deficits.
Ripple is branching out into the sector of backing leveraged stock exchange-traded funds, steering the cryptocurrency enterprise into a landscape long governed by prominent banks and brokerage institutions.
Its prime brokerage branch, Ripple Prime, is offering credit to funds that enable investors to amplify daily price shifts of individual equities and broad market benchmarks, as detailed in a Wall Street Journal report on Wednesday.
Ripple broke into this market through its $1.25 billion purchase of Hidden Road, a multi-asset prime brokerage company, back in October 2025. The transaction granted Ripple an established enterprise that executes trade clearings, supports investment holdings, and processes transactions across equities, fixed income, foreign exchange, and crypto assets.
An investment fund aiming for twice the daily performance of Nvidia can engage in a financial agreement known as a total return swap instead of purchasing double the amount of actual Nvidia shares. A broker supplies the exposure, typically hedging its proprietary risk through equity acquisitions or alternate trades, while gathering a lending fee from the fund.
The Journal revealed that the Tradr 2X Long SNDK Daily ETF, which tracks twice the daily movement of memory-chip manufacturer Sandisk, compensates Ripple at the overnight bank funding rate—a standard measure for bank overnight borrowing expenses—plus an additional four percentage points.
This places the annualized lending rate at roughly 8% based on current rates, billed against the swap exposure and kept separate from the ETF management charge.
The United States market currently features 593 leveraged ETFs containing upwards of $256 billion, which includes 426 funds following single equities, according to Morningstar Direct data.
Commercial banks have historically provided the bulk of this credit, but stricter capital guidelines and risk regulations have opened doors for nonbank entities such as Ripple Prime, Jane Street, and Clear Street.
Ripple unveiled its Delta One division in August, delivering total return swaps linked to U.S. equities, market indices, and digital tokens. The company stated at the time that the unit possessed over $1 billion in regulatory net capital and finalized a $275 million senior debt offering to support further expansion.
Simultaneously, the firm unveiled an extended pact on Tuesday with hedge fund operator Brevan Howard, wherein Ripple Prime will supply brokerage, clearing, and financing operations spanning numerous asset categories.
Leveraged ETFs reset their exposure on a daily basis, meaning sudden swings in individual equities can leave financing providers vulnerable if a fund’s capital proves inadequate to absorb losses.
This venture secures fee-based revenue for Ripple linked to stock trading and institutional financing activities. Consequently, the firm has yet to clarify how much income its leveraged ETF funding generates or what percentage of that volume leverages XRP or the XRP Ledger.
Originally published at https://www.coindesk.com/markets/2026/10/08/ripple-is-earning-fees-financing-leveraged-stock-bets-a-business-long-run-by-banks.
