The U.S. leveraged ETF industry comprises 593 funds with more than $256 billion in assets, including products linked to XRP. Ripple Prime is moving into this market by offering total-return swap financing to fund managers, challenging a segment traditionally dominated by major banks. The expansion will test whether a cryptocurrency-focused company can compete in a business that requires substantial capital, sophisticated financial infrastructure, and strict risk controls.

The move builds on Ripple’s $1.25 billion acquisition of Hidden Road, which was completed in 2025 before the business was renamed Ripple Prime. The company is now extending its services into traditional finance, where swap financing can generate recurring fees but also exposes providers to potential losses when underlying assets experience significant price swings.

Ripple announced the Hidden Road acquisition in April 2025, describing the firm as a multi-asset provider of brokerage, clearing, and financing services. Following the transaction, the business became part of Ripple’s broader 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 highlights Ripple’s efforts to strengthen its institutional relationships and expand its footprint in conventional financial markets.

Leveraged ETF Financing Creates Revenue Opportunities and Risks

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

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

The financing business can deliver substantial revenue. For example, the Tradr 2X Long SDNK Daily ETF pays Ripple a rate linked to the overnight bank funding rate plus four percentage points. As of October 7, this translated into an annualized financing cost of approximately 8% of the fund’s assets.

These charges are applied in addition to management fees and affect the fund’s net asset value. Over longer holding periods, financing expenses accumulate alongside daily resets and movements in the underlying securities, potentially making leveraged exposure more costly than a simple multiple of an asset’s long-term return.

However, swap financing also carries counterparty risks. A sharp one-day decline in an underlying stock could wipe out a leveraged ETF’s equity, potentially leaving its financing provider exposed to losses. Providers generally mitigate this risk by hedging their positions through other investment firms or market makers.

Major banks have traditionally controlled much of the leveraged ETF financing market. However, tighter restrictions on their risk-taking activities have created opportunities for nonbank competitors. Jane Street and Clear Street are among the firms identified as expanding their presence in this sector.

Can Ripple Prime’s Expansion Create Value for XRP?

Ripple Prime is pursuing additional institutional clients, including hedge funds, as it broadens its financial services operations. Its agreement to provide brokerage, clearing, and financing services to Brevan Howard illustrates this strategy.

Since acquiring Hidden Road, Ripple has also expanded its U.S. institutional cryptocurrency offerings, including over-the-counter swaps, cross-margining, and financing. These developments indicate that the company is building a multi-asset prime brokerage business that extends beyond cryptocurrency trading and payments.

Ripple’s institutional activities also include custody and tokenization-related partnerships, such as its work involving South Korea’s Meritz Securities. Although these relationships demonstrate the company’s wider ambitions, they do not establish that XRP is being used to collateralize or facilitate the leveraged ETF swaps.

For XRP, Ripple Prime’s expansion is primarily a long-term development for the company’s institutional ecosystem rather than an immediate bullish catalyst. Growth in Ripple’s financial services business does not automatically translate into greater demand for its associated digital asset.

A more direct benefit for XRP would depend on whether the expansion increases the token’s practical use, generates measurable demand, or attracts additional buyers. Without evidence of such developments, the immediate effect on XRP’s market price may remain limited.

Investors should continue monitoring trading volume, market sentiment, and XRP’s reaction around key resistance levels before interpreting the announcement as a sign of an approaching rally. XRP was trading near $1.41, with little immediate evidence of a positive market response to Ripple Prime’s entry into leveraged ETF financing.