Key points
- Ripple Prime enters the $256 billion leveraged ETF market
- It is reported that an ETF pays an annualized financing cost of approximately 8%.
- New revenue on Wall Street may not directly benefit XRP.
Ripple is further expanding into Wall Street’s $256 billion leveraged exchange-traded fund (ETF) market. Its Ripple Prime division is earning financing fees from investment products tied to stocks and market indices.
This expansion follows Ripple’s acquisition of Hidden Road for $1.25 billion in 2025. According to a October 7 report by The Wall Street Journal, the company is now competing with traditional banks in a financing business that supports leveraged ETFs tracking companies such as NVIDIA and SanDisk.
This financial opportunity is substantial, but it raises an important question for XRP holders: How much of Ripple’s growing traditional finance business will actually generate demand for XRP?
Ripple enters the $256 billion ETF market dominated by banks
According to data from Morningstar Direct cited in the report, the U.S. leveraged ETF market consists of 593 funds with a total assets under management exceeding $256 billion. Of these, 426 products track individual stocks rather than diversified indices.
These funds typically use total return swaps to achieve amplified daily exposure without directly purchasing an equivalent amount of underlying securities.
Ripple Prime provides financing and derivatives exposure through its Delta One business, launched in August. The company’s official announcement at the time confirmed support for swap products linked to U.S. equities, indices, and digital assets.
Following the acquisition of Hidden Road, Ripple gained access to this niche market and the infrastructure previously used for institutional clearing, financing, and multi-asset trading.
This adds a new dimension to Ripple’s existing prime brokerage business, which processes over $3 trillion in clearing activities annually.
Ripple could potentially charge an 8% financing fee on leveraged ETF swaps.
A reported transaction illustrates this business model.
The Tradr 2X Long SNDK Daily ETF aims to deliver twice the daily price performance of SanDisk. The fund reportedly charges a fee equal to the overnight bank financing rate plus 4 percentage points paid to Ripple Prime.
Based on current market conditions, this corresponds to an annualized financing rate of approximately 8%, and this fee is separate from the ETF management fee.
For example, an annual financing fee of 8% on a $100 million swap exposure equates to approximately $8 million before deducting funding costs, hedging expenses, and other obligations.
However, this fee rate does not equate to Ripple's net profit margin, and the company has not disclosed the total revenue generated from its leveraged ETF financing business.
This business also exposes counterparties to potential losses during extreme market volatility, particularly when leveraged positions move significantly against expectations.
Will Ripple’s Wall Street expansion benefit XRP?
Ripple Prime's growth does not automatically translate into demand for XRP.
Total return swaps linked to U.S. stocks can be financed and settled through traditional financial infrastructure without using XRP transactions.
Ripple's broader institutional strategy does include digital assets, but the company has not disclosed what proportion of its leveraged ETF financing business uses XRP or the XRP Ledger.
As Ripple expands into traditional financial markets, and investment products and treasury firms focused on XRP develop independently, this distinction is becoming increasingly important.
Ripple Prime previously enhanced its financing capabilities through a $200 million financing arrangement provided by Neuberger Specialty Finance and a $275 million senior note issuance.
The company's August funding announcement stated that one of the reasons for raising additional capital is growing institutional demand.
Author: Marcus Hale
Marcus Hale is a journalist covering cryptocurrency and financial markets, reporting on Bitcoin, Ethereum, digital assets, regulation, ETFs, and institutional adoption. His work focuses on market dynamics, investor trends, and the broader forces shaping the crypto economy.