Ripple Builds New Revenue Stream by Funding Leveraged Stock Positions

Ripple is taking on a business traditionally led by banks by financing leveraged exchange-traded funds tied to individual stocks and market indexes.

The crypto company entered the space through its $1.25 billion acquisition of Hidden Road, giving it access to a Wall Street market where funds pay for financing that allows them to magnify daily stock movements, including those of Nvidia and Sandisk.

Ripple Prime, Ripple’s prime brokerage division, is providing financing to funds seeking leveraged exposure to individual equities and indexes, according to a Wall Street Journal report Wednesday.

Ripple completed its acquisition of Hidden Road in October 2025. The multi-asset brokerage brought capabilities spanning trade clearing, investment financing and transaction processing across stocks, bonds, currencies and digital assets.

Leveraged funds can use total return swaps to increase their exposure without purchasing an equivalent amount of shares. A fund seeking twice Nvidia’s daily performance, for example, can enter a swap instead of buying twice the value of Nvidia stock.

The broker provides the market exposure and usually hedges the risk through purchases of the underlying shares or other transactions. In exchange, it charges the fund a financing fee.

The Wall Street Journal reported that the Tradr 2X Long SNDK Daily ETF, which targets twice the daily performance of Sandisk, pays Ripple the overnight bank funding rate plus four percentage points.

Based on prevailing rates, that works out to an annualized financing cost of about 8%. The financing charge is calculated on the swap exposure and is separate from the ETF’s management fee.

The U.S. leveraged ETF market has grown considerably. Morningstar Direct data shows 593 leveraged ETFs with more than $256 billion in assets, including 426 products that track individual stocks.

Banks have historically provided much of the financing for these funds. However, tighter capital and risk requirements have opened opportunities for nonbank firms such as Ripple Prime, Jane Street and Clear Street.

Ripple launched its Delta One business in August, offering total return swaps linked to U.S. stocks, indexes and digital assets. At launch, the company said the unit had more than $1 billion in regulatory net capital. Ripple also completed a $275 million senior debt offering to support further expansion.

The company is continuing to build its institutional finance operations. On Tuesday, Ripple announced an expanded agreement with hedge fund manager Brevan Howard, under which Ripple Prime will provide brokerage, clearing and financing services across multiple asset classes.

The structure of leveraged ETFs can expose financing providers to additional risk because the products reset their positions daily. Sharp movements in individual stocks can result in losses if a fund’s collateral is insufficient.

For Ripple, the business creates another stream of fees linked to stock trading and institutional financing. The company has not disclosed the revenue generated from leveraged ETF financing or how much of the activity, if any, involves XRP or the XRP Ledger.