XRP and Ripple Set Sights on Wall Street’s Lucrative $256B ETF Sector

The U.S. leveraged ETF sector consists of 593 funds holding more than $256 billion in assets, including products connected to XRP. Ripple Prime is expanding into this market by offering total-return swap financing to investment managers, placing itself in direct competition with financial institutions that have historically dominated the industry. The move will test whether a company rooted in cryptocurrency can establish a foothold in a capital-intensive business that requires advanced risk management.

This expansion follows Ripple’s $1.25 billion purchase of Hidden Road, completed in 2025, after which the business was renamed Ripple Prime. The company is extending its prime brokerage services into traditional financial markets, where swap financing can provide recurring fee income but also exposes providers to potential losses during sudden market movements.

Ripple announced the Hidden Road acquisition in April 2025, describing the firm as a multi-asset platform specializing in brokerage, clearing, and financing. After the deal was completed, the business adopted the Ripple Prime name as part of Ripple’s broader push into institutional financial services.

On October 6, Ripple Prime revealed that it would offer brokerage, clearing, and financing services to hedge fund Brevan Howard. The agreement demonstrates Ripple’s efforts to build relationships with established investment firms and expand its presence in traditional finance.

Leveraged ETF Financing: Revenue Potential and Financial Risks

Leveraged exchange-traded funds use derivatives such as total-return swaps to amplify the daily returns of stocks or market indexes. Financing providers supply these contracts in exchange for fees and generally hedge their exposure by purchasing the underlying securities.

Data from Morningstar Direct, cited by The Wall Street Journal, indicate that the U.S. market has 593 leveraged ETFs with more than $256 billion in assets. Single-stock leveraged funds account for 426 of these products, a category that regulators first approved in 2022.

The financing arrangements can generate substantial revenue. For instance, the Tradr 2X Long SDNK Daily ETF pays Ripple a rate based on the overnight bank funding rate plus four percentage points. On October 7, that formula translated into an annualized financing cost of approximately 8% of the fund’s assets.

These financing charges are incurred alongside management fees and are reflected in the fund’s net asset value. Over time, the expenses can accumulate with daily portfolio resets and fluctuations in the underlying securities, making leveraged investments more expensive to maintain than a simple multiple of an asset’s long-term return might suggest.

The business also exposes financing firms to counterparty risk. A sharp one-day decline in an underlying stock could eliminate a leveraged ETF’s equity, potentially leaving the provider facing losses. Firms generally limit this exposure through hedging arrangements with other investment managers or market makers.

Large banks have traditionally controlled much of this market. However, tighter restrictions on their risk-taking capacity have opened opportunities for nonbank firms. Jane Street and Clear Street are among the companies reportedly strengthening their positions in leveraged ETF financing.

Will Ripple Prime’s Expansion Have an Impact on XRP?

Ripple Prime is pursuing more institutional clients, including hedge funds, as it broadens its financial services operations. Its agreement with Brevan Howard illustrates the company’s strategy of establishing stronger connections with major investment managers.

Since acquiring Hidden Road, Ripple has also expanded its institutional cryptocurrency services in the United States, including over-the-counter swaps, cross-margining, and financing. These developments show that the company is building a multi-asset brokerage operation that extends beyond payments and cryptocurrency trading.

Ripple’s institutional network also includes custody and tokenization initiatives, such as its work involving South Korea’s Meritz Securities. While these partnerships highlight its broader ambitions, they do not demonstrate that XRP is directly used as collateral for, or plays a role in, the leveraged ETF swap arrangements.

For XRP holders, Ripple Prime’s entry into leveraged ETF financing is better viewed as a potential long-term development than an immediate catalyst for a price increase. Expanding Ripple’s institutional business does not automatically create additional demand for XRP.

The token could benefit more directly if the expansion leads to measurable XRP usage, increases demand for the asset, or attracts new investors. Without evidence of these outcomes, the immediate market impact may remain modest.

Investors should monitor XRP’s trading volume, overall market sentiment, and price movements around important resistance levels before treating the development as a bullish signal. XRP was trading near $1.41, with little immediate indication that Ripple Prime’s expansion into leveraged ETF financing had triggered a positive market reaction.