The U.S. leveraged ETF market consists of 593 funds managing more than $256 billion in assets, including products associated with XRP. Ripple Prime is expanding into this sector by providing total-return swap financing to fund managers, challenging a market that has long been dominated by traditional banking institutions. The expansion will test whether a cryptocurrency-focused company can establish itself in a capital-intensive industry that demands extensive risk management.
The initiative follows Ripple’s $1.25 billion acquisition of Hidden Road, finalized in 2025 before the business was renamed Ripple Prime. The company is now broadening its presence in conventional financial markets, where swap financing can deliver recurring fee income but also carries significant risks when the prices of underlying assets move sharply.
Ripple announced its agreement to acquire Hidden Road in April 2025, presenting the company as a multi-asset platform offering brokerage, clearing, and financing services. Following the completion of the acquisition, the business was integrated into Ripple’s institutional strategy under the Ripple Prime brand.
On October 6, Ripple Prime announced that it would provide brokerage, clearing, and financing services to hedge fund Brevan Howard. The agreement represents another step in Ripple’s efforts to expand its institutional client base and compete across a wider range of financial markets.
Leveraged ETF Financing: Potential Income and Exposure to Risk
Leveraged exchange-traded funds rely on derivatives, including total-return swaps, to magnify the daily returns of individual stocks or indexes. Under these arrangements, financial firms provide financing in return for fees and typically hedge their exposure by purchasing the underlying securities.
Morningstar Direct data cited by The Wall Street Journal show that the U.S. leveraged ETF market contains 593 funds with more than $256 billion in assets. Single-stock leveraged ETFs account for 426 of these products, a category regulators first approved in 2022.
The financing model can generate significant fees. One example is the Tradr 2X Long SDNK Daily ETF, which pays Ripple a rate linked to the overnight bank funding rate plus four percentage points. On October 7, this translated into an annualized financing cost of approximately 8% of the fund’s assets.
These charges are separate from management fees and are incorporated into a fund’s net asset value. Over longer periods, financing expenses can compound alongside daily rebalancing effects and changes in the underlying asset’s price. As a result, leveraged ETFs can become increasingly expensive to maintain compared with a simple multiple of an asset’s long-term performance.
Despite the potential revenue, swap financing exposes providers to counterparty risk. A substantial one-day decline in an underlying stock could eliminate the equity backing a leveraged ETF, potentially leaving the financing firm with losses. Providers generally manage this exposure through hedging arrangements with other investment managers or market makers.
Traditional banks have historically led the leveraged ETF financing business. However, restrictions on the amount of risk they can assume have created opportunities for nonbank firms. Jane Street and Clear Street are among the competitors reportedly expanding their positions in this segment.
Could Ripple Prime’s Growth Influence XRP’s Price?
Ripple Prime is seeking additional institutional clients, including hedge funds, as it expands its financial services business. Its agreement with Brevan Howard, announced on October 6, illustrates the company’s efforts to establish stronger relationships with major investment managers.
Following the acquisition of Hidden Road, Ripple also expanded its institutional cryptocurrency services in the United States. These include over-the-counter swaps, cross-margining, and financing. Collectively, these developments show that Ripple is building a multi-asset prime brokerage operation that extends beyond payments and conventional cryptocurrency trading.
Ripple’s institutional strategy also includes initiatives involving custody and tokenization, including work associated with South Korea’s Meritz Securities. These relationships demonstrate the breadth of its expansion, but they do not establish that XRP is directly used in the leveraged ETF financing arrangements.
For XRP investors, Ripple Prime’s entry into leveraged ETF financing represents a potential long-term development for the company’s institutional ecosystem rather than an immediate price catalyst. A stronger connection to traditional finance does not automatically translate into increased demand for XRP.
The token could benefit more directly if Ripple Prime’s activities generate measurable XRP usage, increase demand for the asset, or attract additional investment. Without evidence of those developments, the immediate price impact may remain limited.
Market participants should therefore focus on XRP’s trading volume, investor sentiment, and movements around key resistance levels before treating the announcement as a signal of an upcoming rally. XRP was trading near $1.41, with little immediate evidence of a positive price response to Ripple Prime’s leveraged ETF financing expansion.
